Using Deeds Office transfer data for transactions by individuals, FNB, in their most recent property barometer, observed a slowdown in the residential property market. John Loos, household and property sector strategist at FNB, explained that based on a three-month moving total, the year-on-year growth rate for total property transfers by individuals grew slightly by 0.4% for the three months to January 2016. “This represents a significant slowdown since April 2015, at which stage total transfers grew by 19.6%,” said Loos.
Loos went on to state that the portion of transfers that were bonded showed a year-on-year decline of -2.1% for the same period. Also a notable slowdown from 17.1% for the three months to April 2015. Another indication of a market slowdown is the decline in the average bond value: -1.8% year-on-year for the three months to January 2016. Loos said that this may, however, in part be due to the lower end of the market still being more active than the high-end residential market.
Accepting the data used as a reasonable proxy, Loss believed that the slowdown in transfers and value growth in the residential market observed in Q1 2016 can be attributed to the gradual interest rate hiking over the last two years along with multi-year economic stagnation.
Photo: A luxury home in Cape Town