“Under the circumstances,  was a good year. It’s not a booming market. I call it a very stable and rational market at the moment, which is healthy. I’m not sure you want booms at the moment. A boom to me would be irrational because we’ve got an economy that’s not backing something that should boom. It’s only two per cent economic growth,” John Loos, household and property sector strategist at First National Bank (FNB) Home Loans, told CNBC Africa.
“It’s always healthier for your housing market to move in line with your economy. Our economy’s mediocre, so if you get price growth that’s maybe a little bit above CPI inflation, that’s what we should’ve expected.”
Loos however added that a boom can be precipitated by a big reduction in interest rates, such as what the country experienced in the late 1990s and early past decade.
“We haven’t had much in the way of reduction in interest rates for a couple of years now, so what you should find is just a very stable market and indeed that’s what we do find,” said Loos.
“[It’s] no longer really oversupplied, more and more agents in our surveys stock shortages, so the balance between supply and demand has improved quite significantly since 2008 and 2009.”
The average price of homes transacted at over 891,000 rand for 2013, compared to the 835,000 rand in 2012. The real price average for 2013 was also recorded as 42.6 per cent above the real price average for 2003.
Loos explained that there’s an increased amount of building activity in the lower end of the country’s housing market, but that building growth has not been particularly significant since the housing slump.
The slow recovery in building activity has also acted as a constraint across all segments in the housing industry.
“Given that we’ve had these gradually-building stock constraints through last year, building activity hasn’t really grown significantly yet. I would expect it to start growing this year. For the time being, we’re constrained on the stock side,” said Loos.
“Despite a slow economy, I do expect slightly faster house price growth and I’m pencilling in maybe a nine per cent average for this year.”