Bloemfontein – The Free State Barometer fared slightly
better in June than in May – but as in the rest of the country this province's
economy is showing lacklustre growth for 2012.
In June the Sake24 Free State Barometer slid 0.5% year-on-year (y/y).
This index, which measures economic activity in nine
sectors, is nevertheless 10.2% up on three years ago when the recession was at
its height.
“We must not make the mistake of becoming too pessimistic
about the current downturn because there are still sectors of the provincial
economy showing signs of growth,” said economist Mike Schüssler, who compiles
the Free State Barometer.
One sector that surprised him is construction (14.5% up on
the year before and 23% up quarter-on-quarter).
“It seems that a couple of large construction projects were
recently completed in the province, causing the index to rebound.”
Sales of timber in June rose 5.8% y/y – an indication that
more houses are being built than in the previous year as timber is chiefly used
for the construction of roof trusses.
The best performer in the Free State was its important
agriculture sector, whose index rose 25.5% y/y.
This is mostly attributable to the strong increase in grain
prices. The agricultural index’s component for crops like maize, wheat and
sunflowers was 39% up in June.
Maize is currently expensive because of drought in the
US, resulting in global shortages.
Unlike in many other provinces, the Free State’s property
sector is currently fairly healthy.
The financial, property and business services index is
admittedly 2.7% down, but that is attributable to a 17.4% decline in
advertising sales – the third successive month that the sector has contracted.
Property transfers in the province increased by 14.6% and
the number of home loans approved were 5.1% up on the previous year.
Banks' lending criteria remain strict, said Riaan Malan, a
director at Naudes and principal of Aïda.
“Other than previously, certain banks are granting complete
loans, but then even stricter criteria are being imposed. As a consequence few
buyers still qualify.”
He said there is particularly strong demand in the R900 000
to R1.2m price category.
“Properties in retirement villages are also doing very well
owing to strong demand.”
- Sake24
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