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The First National Bank estate agent survey for first quarter 2011 points to agents’ perceptions of housing affordability – in terms of price levels relative to buyer income levels – having improved significantly. That was due to anaemic house-price growth over the first quarter, the likelihood of wage inflation being significantly stronger than house-price growth and low interest rates.
PRICE GROWTH SLOWS Over first quarter 2011, year-on-year house price growth declined further to 0,92%, according to the FNB house price index, from the previous quarter’s 3,1%. That was the third quarter of slowing year-on-year growth after the mini acceleration of both the economy and the housing market out of the extreme slump of 2008/2009. The interest rate effect has worn off.
PERCEPTIONS IMPROVE Insignificant house price inflation, coupled with the far stronger wage remuneration inflation and low interest rates, make it very likely the affordability of housing continued on its improving trend in the early stages of 2011. In FNB’s first quarter, estate agents surveyed showed a significant improvement in their perceptions of housing affordability.
INCOME GROWTH STRONG The two measures of affordability are the “average house price/average remuneration ratio” and the “instalment value on an average priced house/average remuneration ratio”. Wage data is only available up to third quarter 2010, which showed growth of 12,6% year-on-year. Both those ratios expressed as an index show affordability has improved, reflecting strong income growth.
SEGMENT GAINS A breakdown of the property market shows the affordable housing segment (average price: R377 864) is the one growing the strongest. On a quarter-on-quarter basis the graph shows all four segments growing at a slower rate, but with the affordable areas index holding up best to date. The top end area index was slightly higher than high and middle income.
PRICE GROWTH SLOWS Over first quarter 2011, year-on-year house price growth declined further to 0,92%, according to the FNB house price index, from the previous quarter’s 3,1%. That was the third quarter of slowing year-on-year growth after the mini acceleration of both the economy and the housing market out of the extreme slump of 2008/2009. The interest rate effect has worn off.
PERCEPTIONS IMPROVE Insignificant house price inflation, coupled with the far stronger wage remuneration inflation and low interest rates, make it very likely the affordability of housing continued on its improving trend in the early stages of 2011. In FNB’s first quarter, estate agents surveyed showed a significant improvement in their perceptions of housing affordability.
INCOME GROWTH STRONG The two measures of affordability are the “average house price/average remuneration ratio” and the “instalment value on an average priced house/average remuneration ratio”. Wage data is only available up to third quarter 2010, which showed growth of 12,6% year-on-year. Both those ratios expressed as an index show affordability has improved, reflecting strong income growth.
SEGMENT GAINS A breakdown of the property market shows the affordable housing segment (average price: R377 864) is the one growing the strongest. On a quarter-on-quarter basis the graph shows all four segments growing at a slower rate, but with the affordable areas index holding up best to date. The top end area index was slightly higher than high and middle income.
