Advice and Opinion

Lightstone – What's in store for the residential property market

Lightstone, a provider of comprehensive data, analytics and systems on property, automotive and business assets looks at what is in store for the residential property market in 2014.

Total year-on-year national house price growth was recorded at 7.4% at the end of December 2013 which was 0.15 % above Lightstone’s optimistic forecast for last year. This was on the back of expected sluggish economic growth of 2%, a CPI rate nearing the 5.8% mark and prime interest rates at 8.5%. “Since very little change in the main drivers of house prices are expected during 2014, Lightstone’s house price forecast follows suit. The expected year-on-year residential inflation for 2014 is around 6.7% with the chance that it could be revised should certain structural changes in the economy occur as the year progresses,” says Paul-Roux de Kock at Lightstone.

The total number of housing transactions and mortgage bonds issued annually has remained fairly constant over the past three years at 235,000 and 122,500 respectively. The total Rand value of transactions and bonds has however increased by roughly 24% over the same three year period which is substantially higher than the 15% average growth recorded in house prices.

“Potential increases in the number of property sales will have to be largely financed by banks which are still less likely to cover higher LTVs (Loan to Value) to the same extent as they did before 2008. This means that in the absence of increased risk appetite by banks, we expect the amount of buyers to remain at similar levels to 2013 and therefore don’t expect increased market activity to drive up house price inflation,” explains Paul-Roux

 

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