Global house prices increased by only 1.8 percent in the year to March, the lowest annual rate of growth recorded since Q4 2009.
Pam Golding Properties reports that Cape Town's Atlantic Seaboard area including City Bowl, remains relatively recession-proof.
According to the Knight Frank Global House Price Index Q1 2011, in regional terms, Asia remains the top performing continent recording 8.4 percent growth over the last 12 months. This is down from 17.8 percent a year earlier.
Liam Bailey, head of residential research at Knight Frank told Property24 that overall, price growth for the countries tracked within the index has remained in positive territory since Q4 2009.
This he says has been largely as a result of the Asian housing market boom, which led in some cases to annual price inflation of between 30 and 40 percent in locations such as Hong Kong and Singapore.
“The anti-inflationary measures taken by Asian governments to cool their overheated housing markets in 2010 and 2011 have started to take effect and this has had a dampening effect on the index’s overall price growth,” says Bailey.
In Q1 2010, Singapore recorded annual price inflation of 24.1% and this fell to 10.5 percent in Q1 2011. House price growth in Hong Kong declined from 32.8 percent to 24.2 percent over the same period, he says.
Other strong performing countries where governments are fighting to pull inflationary pressures under control were India (21.9 percent) and Taiwan (14.3 percent).
The weakest region was North America which saw a fall of 0.4 percent in values in the year to Q1 2011.
House prices in South Africa fell by 1.3 percent in the year to March 2011 as recorded in the index. In March 2010, the average house price was R1 051 997 but by March 2011, this figure had fallen to R1 038 322. In the three months to March 2011, the average house price rose by 1.5 percent, explains Bailey.
Asked where the South African market is headed in the next few months to end of 2011, he says the market presents risks and opportunities.
Globally, sovereign debt concerns in US and Europe could weaken investor confidence. Secondly, interest rates in South Africa may have bottomed out and may start to rise in 2012.
“This could threaten first time buyer demand, which has been solid in recent months and an important driver of market activity.”
On opportunities, Bailey says there is growing evidence that an increasing number of homeowners are selling due to financial pressure and opting to rent. This move could boost supply and may attract more buy-to-let investors to the sales market.
“South Africa’s trade links with China (and other BRICs nations) have strengthened considerably in the past two years.”
This modern double-storey home in Mostertsdrift, Stellenbosch, is on the market exclusively through Pam Golding Properties, priced at R18.5 million. The home is set on 2000sqm, and was built in 2008. It offers six en-suite bedrooms.
According to the Department of Trade of Industry two-way trade between China and South Africa reached R119.7 billion in 2009. This means China surpassed the US as South Africa’s largest trading partner.
Bailey says the strongest performing housing markets have seen a convergence of factors such as high demand, constrained supply, significant wealth generation and benign economic conditions.
“Supply can be controlled but housing markets are also intrinsically linked to confidence.”
Government and monetary policy decisions such as maintaining interest rates at historical lows has helped to keep the momentum going in the western housing markets.
“We expect to see the current slowdown in global housing markets to continue, hitting a low point in Q4 2011 (assuming the Asian markets continue to cool and the government intervention is successful) but with a slow recovery in global house prices taking place in 2012,” adds Bailey.
Absa Home Loans property analyst, Jacques du Toit says the global housing market is very mixed. Some countries are showing growth while others are still under pressure.
“In South Africa, house price growth is very low at this stage largely as a result of the state of consumer finances,” says Du Toit.
He says household debt to disposable income is still relatively high at almost 77 percent. Many consumers are struggling with bad debt making it difficult for them to obtain credit.
Du Toit reckons the property market will continue to reflect economic and consumer finance conditions.
“I expect very low nominal price growth for 2011 with house prices expected to drop in real terms this year,” says Du Toit.
It appears that the global housing market continues to be somewhat in the doldrums and this seems likely to continue for the foreseeable future, says Dr Andrew Golding, chief executive officer of Pam Golding Properties.
Aerial view of Umhlanga coastline: Elwyn Schenk, Pam Golding Properties area principal in Umhlanga, KwaZulu-Natal says this market is resilient. Its wide appeal and strong commercial growth has attracted those moving in from other areas in the Durban surrounds. Home buyers are a mix of end users and investors across all sectors of the market.
“Our housing market started to turn down almost a year before the start of the global economic downturn and we have been in this down cycle for the best part of four years,” says Dr Golding.
He says the residential property market has held up relatively well from a pricing point of view with prices (generally) only between 10 and 20 percent down off the peak at the height of the cycle.
“The market remains subdued but resilient and this status quo is likely to remain for at least the rest of 2011 and possibly well into 2012.”
Dr Golding says they are seeing an increase in sales numbers and activity levels but the upward trend is slow rather than a rapid recovery.
He adds that key to the faster improvement in the residential market will be a relaxation of the current stringent bank lending criteria. – Denise Mhlanga
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Showing posts with label Knight Frank. Show all posts
Showing posts with label Knight Frank. Show all posts
Friday, 26 August 2011
Friday, 29 July 2011
The Wealthy still favours property
High Net Worth Individuals globally still place property at the top of their investments lists, on average 35 percent of their assets.
The 4.4ha smallholding Piedmont wine farm situated at the foot of the Helderberg Mountain between Stellenbosch and Somerset West. Asking price R25 million.
According to the Knight Frank Wealth Report 2011, property remains close to HNWI with property accounting for 35 percent of their investment portfolios.
The report suggests that the only thing these wealthy individuals would rather put their money into besides property is their own businesses.
In South Africa, HNWI at the moment are holding back from investing in almost all kinds of assets including property, said Lanice Steward, managing director of Knight Frank’s South African associate, Anne Porter Properties.
“The favoured channels for investment are gold, commodities (especially coal, steel and platinum),” said Steward.
She said there is a trend among shrewd investors to build up their portfolios by buying repossessed properties. These properties often sell at 30 percent to 40 percent below their previous values hence the boom in the auction property market.
“SA investors should therefore follow the HNWI as stated in the report and keep significant chunk of assets in property.”
Steward explained that the report indicates a growing conservatism and risk-aversion among HNWI investors. They favour already successful property investments rather than trying riskier or unproven areas.
“South African equities are attracting good capital inflows because the returns are above average when compared to those of the world and can be quickly disposed of if the market sentiment changes.”
She said they remain confident that the appeal of property investments in locations such as Constantia and Stellenbosch in the Cape and Kloof in Kwa-Zulu Natal will continue to attract foreign buyers.
Asked about the future of residential property in South Africa, Steward said the first signs of market recovery are now evident. However, this will take time and they expect a slow improvement throughout 2012 with a return to normal trading conditions by mid-2013.
Wealthy individuals have a knack for lifestyle living. They like to buy vineyards where they can not only produce wines but enjoy a unique residential appeal to suit their status.
This wine farm located at the top of the Helshootge Pass is selling for R38 million.
Steward shares the sentiment adding that previously, four big wine estates in Stellenbosch were acquired by foreign investors. The prospects of secure residential developments on wine and olive estates still appear to be reasonable with slow but steady sales, she said.
“SA vineyards currently have an average price of US$80 000 per hectare,” said Steward.
Estate agents operating in Stellenbosch say wine estates are in demand thanks to the region’s fertile soil and renowned wines.
Pam Golding Properties (PGP) area manager Louise Varga said the wine industry has helped to create some of the most spectacular real estate in Stellenbosch.
“The cost of wine farms depend on location, the size of the farm and scale of the wine making operation,” said Varga.
As an example, she said a large scale farm of about 100ha with a state-of-the-art, high volume cellar can cost approximately R30 million. A small holding of under 5ha might also sell close to the same price.
“Pricing depends on the wine label prominence, the size of export contracts, the quality of water supply in the farm and adds-on such as a restaurant, wedding venue, conference centre and guesthouse elements.”
PGP has on its book a 49ha boutique winery on the Old Paarl Road in Stellenbosch with an established vineyard and orchards. The asking price is R23 million with features such as a restaurant, wedding venue, a small conference facility catering for up to 16 people, a deli and art gallery.
Buyers can also choose from a variety of stock in the Boland and Overberg regions with prices ranging between R4.85 million and R7.8 million for 4.5ha. Investors enjoy the lifestyle of a working farm contained within the safety and convenience of a secure estate.
Located on the Old Paarl and Kraaifontein in Stellenbosch, this wine farm is selling for R23 million.
The Knight Frank report shows demand for vineyards has gathered pace in the past five years. Wealthy vineyard owners fall into two groups – the majority of buyers looking for a holiday house with a few hectares of vines and those who want to produce wine on a larger scale.
The overall prices of vineyards will be affected by commercial vineyard land values in line with bulk wine prices. Furthermore, the report states that although areas producing the best quality wines experience less volatility, bulk wine prices moves are likely to affect the property value of boutique wineries.
According to the Knight Frank Vineyard Index, the Western Cape region in SA is ranked as a developed property market with good buildings, possibly Cape Dutch-style. A 20 to 30 ha of vineyards is valued at US$82 00/ha.
The priciest in the index being Bordeaux and the Dordogne France, classic chateau style featuring six bedrooms , 2 to 20ha priced at US$642 000/ha. – Denise Mhlanga
The 4.4ha smallholding Piedmont wine farm situated at the foot of the Helderberg Mountain between Stellenbosch and Somerset West. Asking price R25 million.
According to the Knight Frank Wealth Report 2011, property remains close to HNWI with property accounting for 35 percent of their investment portfolios.
The report suggests that the only thing these wealthy individuals would rather put their money into besides property is their own businesses.
In South Africa, HNWI at the moment are holding back from investing in almost all kinds of assets including property, said Lanice Steward, managing director of Knight Frank’s South African associate, Anne Porter Properties.
“The favoured channels for investment are gold, commodities (especially coal, steel and platinum),” said Steward.
She said there is a trend among shrewd investors to build up their portfolios by buying repossessed properties. These properties often sell at 30 percent to 40 percent below their previous values hence the boom in the auction property market.
“SA investors should therefore follow the HNWI as stated in the report and keep significant chunk of assets in property.”
Steward explained that the report indicates a growing conservatism and risk-aversion among HNWI investors. They favour already successful property investments rather than trying riskier or unproven areas.
“South African equities are attracting good capital inflows because the returns are above average when compared to those of the world and can be quickly disposed of if the market sentiment changes.”
She said they remain confident that the appeal of property investments in locations such as Constantia and Stellenbosch in the Cape and Kloof in Kwa-Zulu Natal will continue to attract foreign buyers.
Asked about the future of residential property in South Africa, Steward said the first signs of market recovery are now evident. However, this will take time and they expect a slow improvement throughout 2012 with a return to normal trading conditions by mid-2013.
Wealthy individuals have a knack for lifestyle living. They like to buy vineyards where they can not only produce wines but enjoy a unique residential appeal to suit their status.
This wine farm located at the top of the Helshootge Pass is selling for R38 million.
Steward shares the sentiment adding that previously, four big wine estates in Stellenbosch were acquired by foreign investors. The prospects of secure residential developments on wine and olive estates still appear to be reasonable with slow but steady sales, she said.
“SA vineyards currently have an average price of US$80 000 per hectare,” said Steward.
Estate agents operating in Stellenbosch say wine estates are in demand thanks to the region’s fertile soil and renowned wines.
Pam Golding Properties (PGP) area manager Louise Varga said the wine industry has helped to create some of the most spectacular real estate in Stellenbosch.
“The cost of wine farms depend on location, the size of the farm and scale of the wine making operation,” said Varga.
As an example, she said a large scale farm of about 100ha with a state-of-the-art, high volume cellar can cost approximately R30 million. A small holding of under 5ha might also sell close to the same price.
“Pricing depends on the wine label prominence, the size of export contracts, the quality of water supply in the farm and adds-on such as a restaurant, wedding venue, conference centre and guesthouse elements.”
PGP has on its book a 49ha boutique winery on the Old Paarl Road in Stellenbosch with an established vineyard and orchards. The asking price is R23 million with features such as a restaurant, wedding venue, a small conference facility catering for up to 16 people, a deli and art gallery.
Buyers can also choose from a variety of stock in the Boland and Overberg regions with prices ranging between R4.85 million and R7.8 million for 4.5ha. Investors enjoy the lifestyle of a working farm contained within the safety and convenience of a secure estate.
Located on the Old Paarl and Kraaifontein in Stellenbosch, this wine farm is selling for R23 million.
The Knight Frank report shows demand for vineyards has gathered pace in the past five years. Wealthy vineyard owners fall into two groups – the majority of buyers looking for a holiday house with a few hectares of vines and those who want to produce wine on a larger scale.
The overall prices of vineyards will be affected by commercial vineyard land values in line with bulk wine prices. Furthermore, the report states that although areas producing the best quality wines experience less volatility, bulk wine prices moves are likely to affect the property value of boutique wineries.
According to the Knight Frank Vineyard Index, the Western Cape region in SA is ranked as a developed property market with good buildings, possibly Cape Dutch-style. A 20 to 30 ha of vineyards is valued at US$82 00/ha.
The priciest in the index being Bordeaux and the Dordogne France, classic chateau style featuring six bedrooms , 2 to 20ha priced at US$642 000/ha. – Denise Mhlanga
Friday, 10 December 2010
SA property falls in global rankings
The rapid deceleration in house price growth in recent months has seen South Africa slip markedly in the global performance rankings.
UK-based Knight Frank’s latest Global House Price Index shows that South Africa ended the third quarter of 2010 in 22nd place, down from 6th position in the second quarter.
UK-based Knight Frank’s latest Global House Price Index released earlier this week shows that South Africa ended the third quarter of 2010 in 22nd place, down from 6th position in the second quarter. Knight Frank tracks price movements in 48 countries across the world.
According to the latest index, South Africa managed house price growth of an average 3% in the third quarter. That is significantly down from the 14,8% recorded in the second quarter (year-on-year).
However, it’s not only South Africa where the housing recovery has lost steam. Liam Bailey, head of residential research at Knight Frank, says a number of countries have even tipped back into negative growth in the past three months. A total of 14 mainly European countries saw negative growth in the third quarter after they had experienced several quarters of rising prices.
Bailey says there is a growing gap between the less debt-afflicted European economies of Austria, France and Finland who rank in the top 10 and their neighbours to the south and west of the continent like Greece, Spain and Ireland who rank in the bottom 10.
The world’s top performing housing market in the third quarter was Latvia in Eastern Europe with growth of 26,1%. Ireland ended the third quarter at the bottom of Knight Frank’s global house price rankings with negative growth of -14,8%. The report shows that in Dublin declines of up to 50% have been recorded over the past two years.
Bailey says although there is some good news in that for the first time since late 2008 prices are rising in each of the six world regions -- Asia-Pacific is up 9,9%, the Middle East 5,1%, North America 4,2%, South America 3,5%, Africa 3% and Europe 0,8% -- the headlines don’t tell the full story.
Says Bailey: “Digging into the data we can see that there are still considerable issues playing out across global housing markets. While a majority of countries are reporting positive annual growth, 56% saw prices fall in the third quarter of this year.”
Bailey notes there is growing evidence that the global housing recovery, which began in early 2009 following desperate conditions in 2007 and 2008, may just be beginning to run out of steam. Nearly 30% of countries that experienced strengthening conditions in early 2010 saw quarterly price growth turn negative in the third quarter. - Joan Muller
UK-based Knight Frank’s latest Global House Price Index shows that South Africa ended the third quarter of 2010 in 22nd place, down from 6th position in the second quarter.
UK-based Knight Frank’s latest Global House Price Index released earlier this week shows that South Africa ended the third quarter of 2010 in 22nd place, down from 6th position in the second quarter. Knight Frank tracks price movements in 48 countries across the world.
According to the latest index, South Africa managed house price growth of an average 3% in the third quarter. That is significantly down from the 14,8% recorded in the second quarter (year-on-year).
However, it’s not only South Africa where the housing recovery has lost steam. Liam Bailey, head of residential research at Knight Frank, says a number of countries have even tipped back into negative growth in the past three months. A total of 14 mainly European countries saw negative growth in the third quarter after they had experienced several quarters of rising prices.
Bailey says there is a growing gap between the less debt-afflicted European economies of Austria, France and Finland who rank in the top 10 and their neighbours to the south and west of the continent like Greece, Spain and Ireland who rank in the bottom 10.
The world’s top performing housing market in the third quarter was Latvia in Eastern Europe with growth of 26,1%. Ireland ended the third quarter at the bottom of Knight Frank’s global house price rankings with negative growth of -14,8%. The report shows that in Dublin declines of up to 50% have been recorded over the past two years.
Bailey says although there is some good news in that for the first time since late 2008 prices are rising in each of the six world regions -- Asia-Pacific is up 9,9%, the Middle East 5,1%, North America 4,2%, South America 3,5%, Africa 3% and Europe 0,8% -- the headlines don’t tell the full story.
Says Bailey: “Digging into the data we can see that there are still considerable issues playing out across global housing markets. While a majority of countries are reporting positive annual growth, 56% saw prices fall in the third quarter of this year.”
Bailey notes there is growing evidence that the global housing recovery, which began in early 2009 following desperate conditions in 2007 and 2008, may just be beginning to run out of steam. Nearly 30% of countries that experienced strengthening conditions in early 2010 saw quarterly price growth turn negative in the third quarter. - Joan Muller
Friday, 11 December 2009
Global housing on the mend - December 2009
Investors across the globe are starting to return to residential property markets, following what has arguably been one of the longest and strongest real estate slumps the world has ever seen.
The Knight Frank global house price index for third quarter 2009 released earlier this week shows that house prices are now rising in almost 70% of the locations tracked by the British property group, compared to less than 50% in second quarter 2009. Knight Frank compares house price movements in 42 countries.
Liam Bailey, head of residential research at Knight Frank, says although house prices in almost 60% of the countries included in the index are still lower than they were a year ago, most markets have now turned the corner.
Singapore reported the biggest quarterly jump in prices with growth of 15,2% in third quarter. That was followed by Hong Kong (6,3%), Canada (4,9%), Australia (4,2%) and New Zealand (4,2%). South Africa ranks as the sixth fastest growing housing market in Knight Frank's index, with prices up 3,8% in the three months to September 2009 (quarter-on-quarter).
The UK and US, two of the countries hardest hit by the credit crunch and global recession, are also back in positive growth territory with quarterly price increases of 3,7% and 3,2% respectively.
On an annual basis, Israel is now the world' fastest growing housing market with prices rising 13,7% in the year to September 2009. That was followed by Austria (9,7%), Malta (9,7%) and Switzerland (7%). South Africa ranks 15th in the annual growth stakes with prices up 1,3% over the 12-month period.
Dubai is the biggest loser, with prices sliding a massive -47% in third quarter 2009 year-on-year (y/y). There are also a few European countries where prices are still falling on the back of what appears to an oversupply of stock. These include Spain, Denmark and Ireland.
Bailey says Dubai's recent debt woes have no doubt dented investor confidence in that country. The problems now seen in Dubai's housing market underscore the fact that the global housing recovery will not necessarily be smooth sailing, says Bailey.
However, he believes that any further house price falls are likely to be corrections rather than the start of another round of drastic reductions.
Link
Investors across the globe are starting to return to residential property markets, following what has arguably been one of the longest and strongest real estate slumps the world has ever seen.
The Knight Frank global house price index for third quarter 2009 released earlier this week shows that house prices are now rising in almost 70% of the locations tracked by the British property group, compared to less than 50% in second quarter 2009. Knight Frank compares house price movements in 42 countries.
Liam Bailey, head of residential research at Knight Frank, says although house prices in almost 60% of the countries included in the index are still lower than they were a year ago, most markets have now turned the corner.
Singapore reported the biggest quarterly jump in prices with growth of 15,2% in third quarter. That was followed by Hong Kong (6,3%), Canada (4,9%), Australia (4,2%) and New Zealand (4,2%). South Africa ranks as the sixth fastest growing housing market in Knight Frank's index, with prices up 3,8% in the three months to September 2009 (quarter-on-quarter).
The UK and US, two of the countries hardest hit by the credit crunch and global recession, are also back in positive growth territory with quarterly price increases of 3,7% and 3,2% respectively.
On an annual basis, Israel is now the world' fastest growing housing market with prices rising 13,7% in the year to September 2009. That was followed by Austria (9,7%), Malta (9,7%) and Switzerland (7%). South Africa ranks 15th in the annual growth stakes with prices up 1,3% over the 12-month period.
Dubai is the biggest loser, with prices sliding a massive -47% in third quarter 2009 year-on-year (y/y). There are also a few European countries where prices are still falling on the back of what appears to an oversupply of stock. These include Spain, Denmark and Ireland.
Bailey says Dubai's recent debt woes have no doubt dented investor confidence in that country. The problems now seen in Dubai's housing market underscore the fact that the global housing recovery will not necessarily be smooth sailing, says Bailey.
However, he believes that any further house price falls are likely to be corrections rather than the start of another round of drastic reductions.
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