Loos was cautious in response to the Re/Max National Housing Report for the second quarter (2Q), released this week, that noted that the data for the second quarter of 2019 provided the first glimmers of hope for the property market.
Lightstone Property data showed that a total of 45109 bond registrations were recorded at the Deeds Office totalling more than R49.4 million over the period of April to June.
This translated into an increase of more than 13 percent in the amount of bonds registered since the first quarter of 2019 and an 18.5 percent rise since the 2Q of 2018. The number of transfers (both bonded and unbonded) recorded at the deeds office between the same period also increased by 6 percent from last year, and by 14 percent from the first quarter to 65394 transfers in the second quarter of 2019.
Re/Max Southern Africa regional director and chief executive Adrian Goslett said while it was normal for the second quarter of the year to record more transactions than the first quarter, it was encouraging to see that there was also a sturdy year-on-year growth.
“I, therefore, remain hopeful that the property market will become increasingly active, provided that the newly elected government provides political stability and effectively manages our economic growth as the year progresses,” said Goslett.
Goslett said of the 65394 transfers, a total of 31098 freehold properties and 17034 sectional title units were sold countrywide (these figures exclude estates, farms, and land only transfers). “When compared to the first quarter of 2019, these figures translate into a 12.2 percent increase in the number of freehold properties sold. However, when compared to the figures in Q2 2018, the second quarter of 2019 experienced a 4.2 percent decrease year-on-year.
“Sectional titles, on the other hand, saw an 18.4 percent increase in the number of sales when compared to the sales figures of Q1 2019, and an 18 percent increase when compared to the sales figures of Q2 2018.
“These figures reflect the rising popularity of sectional title living and the increasing supply of these sorts of homes on the market,” Goslett explained.
In the second quarter of 2019, 28.2 percent of transfers fell within the up to R400 000 price range; 24.5 percent priced between R400 000 and R800 000; 25.9 percent between R800 000 and R1.5 million; 16.3 percent were between R1.5m to R3m, while transactions more than R3m accounted for 5.1 percent of all bond registrations for the fourth quarter.
However, Loos said he did not read too much into Q1 worth of deeds transfer data, as the data could be a little volatile. He said the economy might have been slightly better in Q2 after a contraction in Q1, therefore, it was conceivable that housing transactions picked up a little.
“We do forecast a mild improvement in economic growth heading towards 2020, but no fireworks just from 0.6 percent this year's gross domestic product growth to 1.2 percent in 2020, so we expect the economy to remain weak, albeit slightly stronger next year. So I wouldn’t expect any strong strengthening in the housing market either,” said Loos.
He said that he still believed that households should buy well within their means in these times. “The financial state of Eskom and the municipalities suggests further above-inflation hikes in municipal rates and tariffs to come, so housing operating costs can continue to rise and one needs to be capable of absorbing these.”
Loos said the weak state of national government finance meant likely further increase in personal income tax via inflation bracket creep. He said these tough economic times also constrained income growth.