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Johannesburg - The residential property industry is expected to be generally positive in 2015, First National Bank (FNB) said on Monday.
"The market is far from booming, but has shown a nice solid performance over the past three years since 2012," FNB household and property sector strategist John Loos said in a statement.
"Rising demand has gradually mopped up excess supply, and a noticeably increasing percentage of estate agents participating in the FNB Estate Agent Survey have been pointing to shortages in residential units for sale."
Loos said the improving balance between supply and demand drove some positive house price inflation in real terms over the past three years.
The noticeable growth rate in the level of new residential building completions is expected to be the highlight in 2015, he said.
"Economic events look set to be more positive in 2015, compared with 2014, with the drop in global oil and food prices looking set to drive consumer price inflation sharply lower and household real disposable income growth higher.
"These events, in turn, are expected to lead to further residential market strengthening and mildly higher house price inflation this year," he said.
Loos said FNB's forecast of a strong increase in residential building completions had little to do with further residential demand strengthening in 2015.
It would have more to do with prior years' demand growth and the steady build up of existing home supply constraints over the past three years.
FNB believed the time had come for the residential development sector to supply new stock to the market at a significantly faster rate, he said.
He said FNB forecast an acceleration to 2.5% in real disposable income growth in 2015, from 1.5% in 2014. Real economic growth was forecast to accelerate from an estimated 1.5% in 2014 to 2.3% in 2015.
"Forecast risks are probably evenly balanced at this stage, when it comes to economic and disposable income growth," said Loos.
"The upside risks emanate from the strong possibility that we underestimate the positive stimulus to arise from this positive oil price shock."
