Residential property starting to show recovery signs : SARB

The residential property market is beginning to show some signs of recovery, the SA Reserve Bank (SARB) said on Wednesday in its Financial Stability Review, March 2010.

The report -- focusing mainly on the six month period ending December 2009 -- said according to the Absa House Price Index, annual growth in residential property prices turned positive in August 2009.

"According to the latest available data, this trend continued into 2010, increasing by 5.1 percent in January and 6.6 percent in February," the SARB said.

Improved consumer confidence contributed to the recovery in the housing market, the SARB said.

However, despite the upward trend in house prices, "the moderate rate of increase in mortgage advances as reported by banks suggest that banks are still reluctant to extend credit".

According to the Bank's report, confidence in the residential property market improved more noticeably in the third quarter of 2009, following only mild improvements in the preceding quarters.

The Residential Property Confidence Indicator recorded an increase from 4.8 in the second quarter to 5.7 in the third quarter of 2009, and remained on that level in the fourth quarter, the SARB said.

Another indication of improved activity was the decrease in the average time that property remained in the market.

This had dropped further in the fourth quarter of 2009, the SARB said, adding that the buy-to-let- market also showed some improvement.

However, the SARB said the percentage of sellers willing to drop prices to sell properties increased in the fourth quarter of 2009.

"This could support the view that households may still be under financial strain," the SARB said.

Sapa

Posted at 10:23AM Apr 29, 2010 by Editor in Residential  |  Comments[1]