According to the SARB Quarterly Bulletin this month (June 2016) , the value of new residential home loans granted have declined by 14.57% year-on-year from the 1st quarter of 2016. The new data on home lending from the South African Reserve Bank shows a significant year-on-year decline. This is in line with multiple indicators of residential activity pointing to the slowdown in the property market.
Commercial and residential sub-components were “drags” on the growth rate in the 1st quarter. The value of residential mortgages granted declined by 13.8% year-on-year while commercial mortgages declined by 14.9% in the same quarter. According to John Loos, this is notably slower compared with positive growth of 15.2% year-on-year in the previous quarter, and now reflecting a very significant turnaround since the 50.2% year-on-year multi-year high reached in the 1st quarter of 2014.
Both these sectors’ negative growth rates reflect a significant slowing on the prior quarter’s positive growth. Stats SA last week reported South Africa recorded a negative growth rate of -1.2% in the first quarter of 2016, while the country’s unemployment rate increased to 26.7% of the labour force, up 2.2% from the previous quarter.
Loos also pointed out that for the residential mortgage lending sector, the 1st quarter of 2016 was the 3rd consecutive quarter of growth slowdown in the value of mortgage loans granted. The property market analyst said that the residential market is arguably the more “leading sector”, with home loans applicants responding more swiftly to any economic or interest rate changes.
