Johannesburg - Racial transformation of urban residential property ownership remains a land reform success story, according to First National Bank.
FNB household and property sector strategist John Loos said previously-disadvantaged race groups were buying in former white suburbs but appeared to have "treaded water" in 2014.
"While we have come a long way in terms of the racial transformation of residential property ownership, there appears to have been slower progress made in recent times, arguably the result of a poorly performing economy," Loos said in a statement.
"It is arguably the most important part of land ownership reform, given that the majority of South Africa's population is urbanised, and the urbanising trend continues steadily."
Loos said the FNB estate agent survey had, since 2005, provided estimates of race-based home buying in the "former white suburban areas" which put buying from the previously disadvantaged population groups at not far from 50% of total buying, of which near 30% was from the so-called "black" group.
Sensitivity to negative economic events
In the "former black, coloured and Indian township regions", this percentage would now be far higher, he said.
"However, while the racial transformation of residential property buying has come a long way, the surveys have also pointed to a lack of further progress since 2008, which arguably speaks to mediocre economic performance since the end of the boom years around that year.
"The survey question surrounding race-based buying in the "suburbs" only started back in 2005, and at that stage the three previously-disadvantaged race groups were estimated to account for 43% of total suburban home buying," said Loos.
He said this percentage had jumped noticeably to 50% by 2008, with the black group's percentage jumping from 23% in 2005 to 30% by 2008.
Loos said the jump was not surprising and that economic growth in the pre-2008 years averaged nearly 5% which was very strong by South African standards.
Since 2008, there appeared to be a lack of further progress in the buying transformation, he said.
"In addition, residential affordability started to deteriorate in 2014 due to some small interest rate hikes as well as house price inflation outpacing average labour remuneration growth," he said.
He said from 51.5% of total estimated buying in 2013, the total "previously-disadvantaged group" suburban home buying receded to 49.2% in 2014, with the "black group" receding from 31% in 2013 to a 29.25% estimate in 2014.
"This 2014 percentage decline is also reflective of especially the black group's greater sensitivity to any negative economic events," said Loos.
Loos said that real economic growth slowed from 2.2% in 2013 to an estimated 1.5%, which caused the Real Household Disposable Income growth to slow from 2.4% in 2013 to probably nearer 1.5% last year.
"In addition, residential affordability started to deteriorate in 2014 due to some small interest rate hikes as well as house price inflation outpacing average labour remuneration growth."