DURBAN – Director and Licensee of Seeff Zimbali, Andreas Wassenaar explains what we can expect in terms of future activity in the property market, by looking at trends in the demand for mortgage finance.
"Mortgage finance is the fuel that drives the property industry. The South African Reserve Bank (SARB) leading indicator is an excellent predictor of the general direction of the value of mortgage loans granted. This index grew at 6.55 percent at the beginning of 2017, which was its most recent peak, after which it slowed to 2.05 percent by the third quarter of 2018 – thereby predicting that we were due for slower new mortgage lending growth," said Wassenaar.
This was confirmed by the December 2018 SARB Quarterly Bulletin, which showed that the value of new mortgage loans granted for residential and commercial property and farms had declined at a year-on-year rate of 15.91 percent in the third quarter of 2018, from a 6.08 percent positive growth rate for the previous quarter.
According to FNB's published figures the large Residential Mortgage Loans subcomponent slowed to 3.01 percent in the third quarter of 2018, from a positive 7.45 percent year-on-year growth for the second quarter.
The Commercial Mortgage Loans segment subsided more significantly, from +3.17 percent in the second quarter to minus 32.02 percent in the third quarter of 2018.