KZN house price crisis, says bank

2008-03-06 00:00

INCOME growth in KwaZulu-Natal has lagged significantly behind property prices in the province in recent years, according to two noteworthy reports by FNB.

The reports are entitled “State of the Kingdom: KZN Property — Nearing the Bottom?” and the well-known “FNB Residential Property Barometer” (Fourth Quarter 2007).

In the reports, Erras Lintvelt, regional manager of fnb kzn’s home loans division and John Loos, FNB’s national property strategist, said that a whopping 78% of real estate industry professionals surveyed in KZN stated that income levels are far behind house prices.

In contrast, only 47% of those surveyed in Gauteng said the same.

“Of the major three provinces, it would appear that KZN and the Western Cape are harder hit by the deterioration in affordability.

"This comes through in terms of both a calculation of how many households are able to afford the average-priced house, with fewer households being able to afford this in 2006 compared with a decade before, as well as in an FNB Property Barometer question where the overwhelming majority of respondents from KZN indicated that income levels have got far behind house price levels,” said Loos.

Lintvelt said that the trend is not surprising given the far more rampant price inflation in KZN during 2004 and 2005. The reports also indicate that property developers will face tough times ahead.

“StatsSA figures for KZN building completions and plans passed [for 2007] point to a mediocre picture for the KZN residential development market, and there is probably no reprieve just yet.

"In terms of growth in the value of residential buildings completed, KZN registered only 2,2% in 2007, down from 32% in 2006, which would suggest a decline in real terms if one were to adjust the numbers for building cost inflation.

"The value of plans passed, too, grew slowly at six percent, pointing towards further mediocre performance going into 2008,” said Lintvelt.

Lintvelt and Loos believe that this market will “bottom out” during this quarter.

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/Sport

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.