By Nompumelelo Siziba
JOHANNESBURG, Jan 14 (NNN-SABC) — A slowdown in global oil and food prices could give the housing market in South Africa a boost this year, according to property economist John Loos of First National Bank (FNB), one of the country’s Big Four” commercial banks.
He says the combination of the two trends should assist households repair their balance sheets and give some the confidence to dip into the property market.
Since June last year, the global oil price has fallen some 50 per cent and over at least the past five consecutive months, that has been felt positively at the petrol pumps as fuel prices have come down.
Loos says that this spells lower inflation and could therefore see the South African Reserve Bank holding off its process of monetary policy normalisation.
The residential property market could benefit from all this, signalling more optimism for activity and positive growth in the sector compared with last year. There is evidence that the sector is picking up, with FNB expecting residential building completions to rise by more than 21 per cent this year alone.
Various indices tracking building sector sentiment have also shown greater optimism and as more residential property becomes available, it is believed that house prices will continue to rise, but probably at a slower pace in 2016.