Property Barometer – Mining Towns House Price Indices

FNB’s Mining Towns House Price Index continues to point to under performance in the overall national picture. 

Recent developments in the mining sector

South Africa’s Mining Sector returned to positive output growth last year, to the tune of 3.9% for the year, after a contraction of -3.9% in 2016.

Some recovery in global commodity prices following the post-2011 slump has assisted this mild recovery.

FNB Mining Towns House Price Indices’ growth was better in 2017, but still mediocre

This recent return to some positive growth in Mining Production volumes may have been behind a mild strengthening in the FNB Mining Towns House Price Index growth rate in 2017. For 2017 as a whole, the FNB Mining Towns House Price Index grew by 2.7%, mildly faster than the 2.1% for 2016 as a whole.

However, 2.7% remains on the weak side of the overall national market and still negative in real terms (i.e. well below consumer price inflation). In addition, when FNB views the data on a quarterly year-on-year basis, there had been a renewed slowing in the latter stages of 2017, from the year’s high of 3.1% growth reached in the second quarter, to 2.4% by the fourth quarter.

Interestingly, the FNB Gold Mining Towns House Price Index grew slightly faster than the Non-Gold Mining Towns Sub-Index, to the tune of 3.6% in the fourth quarter of 2017, while FNB Non-Gold Mining Towns House Price Index grew by a lesser 1.8%.

Longer run performance and expectations 

Although growing at fairly weak rates itself, the FNB Gold Mining Towns House Price Index has outperformed that of Non-Gold Mining Towns for most of the period since late-2013, despite the ongoing long term decline in gold mining production. This may suggest more “realistic” Gold Mining Town housing markets, which have come to terms with gold’s long term decline, probably translating into far less expansion in housing supply (less supply growth possibly provides slightly more support for house price growth).

But in the longer run, FNB expects Gold Mining Town housing markets to under perform Non-Gold Mining Towns, as they have done cumulatively since early last decade. This is because Non-Gold Mining production continues to be far more stable than the declining Gold Mining output.

From the year 2000 to 2017, Gold Mining Output has declined by -69.7% in SA, while Non-Gold Mining Output has grown by +30.3%.

The difference is reflected in the slower cumulative growth rate in the FNB Gold Mining Towns House Price Index, which has risen by 403% since the beginning of 2001, compared to 465% in the Non-Gold Mining Towns Index.

In more recent times, since the 2011 commodity price slowdown, both Non-Gold Mining and Gold Mining Towns have significantly underperformed the National Market, though, and continued to do so in 2017.

From the start of 2011, the Non-Gold Mining Towns House price Index has risen cumulatively by 27.9%, and the Gold Mining Towns Index by 31.3%, both well below the National House Price Index’s 55.3% rise over the same period.


In short, the FNB Mining Towns House Price Indices were improved in 2017 compared with 2016, perhaps partly reflective of an improved production level in the Mining Sector last year.

However, they continue to under perform the overall National House Price Index.

Read more here: FNB Property Barometer – Mining House Price Indices – February 2018