Banks Assess SA Property Market - 08-06-09

August 6 - Two of South Africa's major home loan banks have announced their assessment of the current situation of the property market with slightly different views.

Standard Bank was slightly pessimistic in its assessment, believing that the 'bottoming out' stage of the poor cycle was yet to come and that we should see prices hit rock bottom at the end of the year.

First National Bank (FNB) believes that the rate at which prices have fallen has slowed down very slightly.

"The FNB House Price Index's decline continued in July, but there is some hint that the rate of decline may be starting to diminish," said the Home Loans strategist at FNB, John Loos. "This, however, does not mean a substantial national price increase just yet, but for the time being a possible slowing in the rate of price decline."

Loos said that it would be premature to conclude that this is the beginning of a substantial improving trend out of the house price deflation cycle, based simply on one data point. However, he did say that certain economic events lead to the possibility that this may be the case.

"Admittedly, with the economy being in recession, any improvement in the residential property market will probably be mild and slow going at slow," said Loos.

In its statement, Standard Bank's Johan Botha said: "The overall growth in the economy, the level of household income and debt, as well as the medium term economic and financial outlook, are such that a clear and immediate improvement in the housing market is unlikely."