ABSA Housing Review 2nd Quarter of 2013 – Key points

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Much information is presented in the ABSA Housing Review

The ABSA Housing Review for the 2nd quarter of 2013 has been recently released.  This report presents the latest developments in the South African economy, household sector and the residential property market.  The key points have been extracted from this in-depth analysis for your convenience:

The fourth quarter of 2012 saw the South African economy growing at a seasonally adjusted, annualised rate of 2,1%, as measured by growth in the country’s real gross domestic product. This was almost double the pace of economic growth in the third quarter of last year, when the economy expanded by only 1,2% on the back of labour unrest in the mining sector, which caused massive losses in commodity production and export revenue. Real economic growth of 2,5% was recorded in 2012 and is forecast to be 2,7% in 2013.

Domestic inflationary pressures have mounted in recent months, driven by rising fuel prices and a weaker exchange rate, which may cause headline consumer price inflation to breach the 6% level in the short term. Based on current trends in and prospects for the global and local economy, as well as the outlook for consumer price inflation, interest rates are, however, forecast to remain at current levels throughout 2013.

The household sector continued to experience some financial strain, with growth in real household disposable income and consumption expenditure slowing down up to end-2012, savings remaining low, the number of credit-active consumers with impaired credit records rising further and consumer confidence at its lowest level in nine years.  Household sector finances will continue to be driven by macroeconomic factors such as economic growth, employment, inflation and interest rates.

Although nominal year-on-year house price growth in the middle segment of the market accelerated to above 10% in the first quarter of 2013, early indications of a moderation in price growth later this year emerged in the first quarter. In real terms house prices increased in the first quarter of the year after deflating for nine consecutive quarters from the fourth quarter of 2010 up to end-2012. House price growth in the category for affordable housing remained in positive territory in the early stages of 2013, whereas price deflation in the luxury segment accelerated in the first quarter of the year from late last year.

Single-digit nominal house price growth is forecast for 2013. This will be the result of recent developments regarding house price growth, as well as trends in and prospects for the economy, household finances and consumer confidence, which are expected to be reflected in the performance of the residential property market. Based on expected trends in nominal price growth and headline consumer price inflation, very little, if any, real house price inflation is projected for 2013.

If you would like the read the complete ABSA Housing Review document, contact YDL Property Investment here and we will e-mail the full document to you with pleasure.