Johannesburg - Home affordability may become more of a problem in 2014 with a slightly higher house price growth and a struggling labour market, First National Bank said on Thursday.
FNB's household and property sector strategist John Loos said after six years of improving residential property affordability this trend might be reversed mildly in 2014.
“This is based on our view that 2014 will yield higher house price growth in a supply constrained residential market, interest rates will remain unchanged, and average employee remuneration will show weak growth in an economy not showing any significant employment growth,” Loos said in a statement.
“Our expectation of slightly more rapid house price growth, rising from an average of 6.8 percent last year to nearer to 9
percent perhaps in 2014, is based more on our perceptions of increased confidence in residential property.”
He said building activity remained slow for the past five years.
Loos said the December SA Reserve Bank Quarterly Bulletin enabled FNB to update their own two housing affordability indices for the second quarter of 2013.
The improving trend in affordability continued in the second quarter of 2013 but at a very slow pace.
It slowed down since 2011, said Loos.
Loos said both their affordability measures declined in the second quarter of 2013 compared to the first quarter.
“Looking forward, however, certain key factors look set to work increasingly against further home affordability improvements for the time being, and possibly even bring about some mild deterioration in 2014,” he said.
“Interest rates aren't yet one of these factors. We believe it unlikely that there will be any further interest rate cutting.”
In November, the Monetary Policy Committee left the repo rate unchanged at five percent. - Sapa