Residential demand picking up

The Third Quarter FNB Residential Property Barometer saw estimated demand activity levels starting to accelerate at a more rapid pace compared with the mild recovery of the preceding three quarters, FNB said on Monday.

The Property Barometer is a survey of a sample of estate agents in the major cities of the country regarding their personal experience of market conditions.

The main Barometer question relates to the level of demand activity, and agents are asked to rate the level of demand that they experience on a scale of 1 to 10.

According to the barometer, after a slow rise from a historic low of 4.1 in the third quarter of 2008, to 4.79 by the second quarter of 2009, it
would appear that the positive impact of the series of interest rate cuts since December 2008, accompanied by a mildly improving economic environment,
was starting to become more noticeable in the Barometer numbers, and the third quarter activity level shifted up more significantly to 5.65

Positive property market news has been pouring in lately - and there was more good news released by property valuations' company Lightstone on Monday. Its latest figures show that by May, a number of areas were showing a marked improvement. Looking at the trend line, Lightstone expects its repeat sales index to show property prices moving up for the first time since July 2008. Its analysis is based on Deeds Office data, with data still coming in for the June to August period.

Adapted from the real estate website 5 october 2009

Prices likely to start rising

It looks likely that a year-on-year (y/y) property price increase will resume in the next few months, the latest FNB House Price Index showed on Thursday.

The index's y/y decline continued to diminish at a steady pace and the deflation rate for September was -4,4% y/y, significantly less than a revised August rate of -6,5%. At this rate, y/y deflation will probably be a thing of the past before year-end.

John Loos, property analyst at FNB Home loans, said this diminishing price deflation trend is a strong sign that the positive impact of 500 basis points' worth of interest rate cuts since December 2008 is starting to be felt in terms of residential market performance.

"It is becoming clearer that the recent months' diminishing price deflation is indeed the start of a trend back towards price inflation, following on an improving trend in demand and transaction volumes, which started earlier in 2009," he said.

"The improvement in the market to date has been very much due to interest rate cuts, which have improved the household sector's ability to service debt."

However, he says, there has been no real help from the economy, which remained in recession until very recently, exerting huge pressure on household disposable incomes.

"The improvement in the market has not only been seen in volume of transactions and diminishing price deflation, but also in an improvement in credit quality. FNB has seen home loan arrears numbers improving, while second quarter insolvencies were down by -40% y/y."

The FNB Price Index has July 2000 as its base month, i.e. July 2000 = 100. The latest index value was 275,6, implying an average value that is 175,6% higher than the price average measured in July 2000 when the time series started. However, from the peak in the index – reached in February 2008 – a cumulative price decline of -5,9% has been recorded to date. – Eugene Brink

http://www.property24.com/articles/news/latest-news/prices-likely-to-start-rising/10515

Nedbank also giving 100% home loans

Nedbank has followed in its competitors' footsteps and decided to relax its deposit requirements for home loans.

During the past year Nedbank insisted on deposits of between 10% and 20% of the value of the property, mainly due to falling house prices. This requirement has now been lowered to deposits of between 0% and 10%, depending on the client's risk profile.

Clive van Horen, head of secured loans at Nedbank, says although the bank believes a 5% to 10% deposit is a good practice for the bank and the client, low-risk clients will qualify for a 100% home loan. This applies to Nedbank clients as well as new clients.

But some of the other banks that have already relaxed their deposit requirements offer clients a different loan amount for the same transaction, depending on whether they apply through a mortgage originator or at a bank branch.

Van Horen says Nedbank won't discriminate by making a distinction between clients who use a mortgage originator or apply at a bank branch. "Although we're encouraging our clients to visit our branches to apply for home loans, we believe that mortgage originators are important partners in introducing new clients to the bank."

http://www.property24.com/articles/news/market-news/nedbank-also-giving-100-home-loans/10517

Contact our property consultants for more information on this development

Nicole: 082 441 9224 /Joel: 084 765 9816/ Office: 011 021 6813