Call Girls In Vasundhara Ghaziabad ❤️8860477959 Low Rate Escorts Service In 2...
FNB_House Price Indices by Segment
1. PROPERTY BAROMETER – House Price Indices by Segment
The Sectional Title Housing Market Segment continues to outperform the Full Title
Segment, although the latter segment has seen its average house price growth
accelerate somewhat
26 February 2018
The Sectional Title Home Market still shows mildly superior average house price growth compared to the
Full Title Market, but the price growth gap between the 2 segments has diminished, with both segments’
year-on-year price growth picking up mildly through 2017.
RECENT HOUSE PRICE PERFORMANCES OF SECTIONAL VS FULL TITLE
The FNB Sectional Title House Price Index
has remained at a faster growth rate than
Full Title of late. The Sectional Title House
Price Index rose by 5.18% year-on-year in
the 4th
quarter of 2017, having
accelerated from 4.96% in the 1st
quarter
of the year.
The Full Title House Price Index, by
comparison, showed a slower 3.95% year-
on-year growth rate in the 4th
quarter of
2017. However, its growth had
accelerated a little more over the year
than the Sectional Title Index, from a
lowly 3.18% year-on-year in the 1st
quarter of 2017.
Our panel of FNB valuers also perceived the Sectional Title market to be stronger than the Full Title market
in the 4th
quarter of 2017.
This perception is reflected in our FNB
Valuers Market Strength Indices (MSI) for
Full Title and Sectional Title, with the
Sectional Title MSI at a level of 50.90, and
the Full Title MSI on a slightly lower 50.41.
Both segment’s MSI’s had started to
strengthen slightly in recent quarters,
though.
Note: FNB Valuers’ Market Strength
Index (MSI) explanatory notes on page 4.
2. SECTIONAL TITLE SUB-SEGMENT PERFORMANCES
Within the Sectional Title segment,
“smaller was still better” in the 4th
quarter
of 2017 when one compares the relative
strength of the various sub-segments’
price growth.
The smallest sized Sectional Title sub-
segment, namely the “Less than 2
Bedroom” segment, showed the strongest
price inflation to the tune of 7.3% in the 4th
quarter of 2017. Then came the 2
Bedroom sub-segment with 6.4% price
growth, while the largest “3 Bedroom and
More” category was the slowest sub-
segment with 3.6% average price growth.
However, it was the 2 Bedroom Sub-Segment that was the onlyone of the 3 to be showing house price growth
acceleration through 2017, from 4.9% in the final quarter of 2016 to 6.4% by the end of 2017, the other 2
sub-segments showing slowing price growth through the year.
FULL TITLE SUB-SEGMENT PERFORMANCES
In the Full Title segment, the popular 3
Bedroom segment has shown the highest
average price growth of the 3 sub-
segments, to the tune of 4.2% year-on-
year in the 4th
quarter of 2017.
The relatively expensive 4 Bedroom and
More Full Title Segment saw a slower
growth rate of 3.7%, while the smallest
sized 2 Bedroom-and-Less segment was
the weakest with 3.3%.
AVERAGE PRICE GAP BETWEEN FULL TITLE AND SECTIONAL TITLE MARKETS CONTINUES TO NARROW
Taking a simple percentage differential
between the average Full Title house price
and that of Sectional Title, the
outperformance of Sectional Title in
recent years has reduced the gap by which
the average Full Title house price exceeds
that of the smaller-sized Sectional Title
category, from a revised 26.6% as at the
end of 2013 to 22.2% by the 4th
quarter of
2017.
3. LONG TERM PERFORMANCES OF MAJOR HOUSING MARKET SEGMENTS
In a view of the long term performance of
our major FNB Segment House Price
Indices, the smaller sized Sectional Title
homes with their more efficient use of
land have clearly been the cumulative
outperformers since the beginning of
2001 around the time when the data
series’ started. This is hardly surprising,
given the mounting scarcity of available
urban land and infrastructure (including
scarcity of new transport infrastructure,
which limits urban sprawl potential) for
new residential development.
Top performer has been the Sectional Title Less than 2 Bedroom Segment, with cumulative average price
inflation of 496.89% from the 1st
quarter of 2001 to the 4th
quarter of 2017.
This far outstrips the 2nd
placed Sectional Title 2 Bedroom Segment’s 376.36% and the Sectional Title 3
Bedroom and More Segment’s 352.98%. The 3 Full Title Segments have “underperformed”, the more popular
3 Bedroom Segment’s 331.41% neck and neck with the 4 Bedroom and More Segment’s 336.71%, but
outstripping the far more affordable 2 Bedrooms and Less Segment’s 284.46%.
CONCLUSION
The FNB Valuers perceive the Sectional Title market to be stronger than that of Full Title, and superior average
house price growth in the Sectional Title market appears to reflect this. However, the year-on-year price
growth rates in both Sectional and Full Title segments accelerated as 2017 progressed, the latter’s growth
accelerating more than the former off a lower base.
The pattern of smaller-sized unit segments outperforming the larger ones is becoming less clear as of late,
however. In the Full Title Segment, the smallest average sized segment, the “2-Bedroon and Less” segment
has recently shown the slowest growth in the main Full Title sub-segments, while in the Sectional Title
segment it is the mid-sized 2-Bedroom sub-segment which has been the only one recently showing average
house price growth acceleration.
It may be that, after some years of smaller sized sub-segments outperforming the larger ones in terms of
price growth, larger sized home now begin to offer relatively better value for money, which could mean that
in 2018 we don’t smaller segments clearly outperforming on price growth.
4. ADDENDUM - NOTES:
Key notes with regard to the FNB Segment House Price Indices by Title and Room Number:
• The Indices are constructed using transaction price data from homes financed by FNB.
• The minimum size cut-off for full title stands is 200 square metres, and the maximum size is 4000
square metres
• The maximum price cut-off is R10m, and the lower price cut-off is R20,000 (largely to eliminate major
outliers and glaring inputting errors).
• The indices are very lightly smoothed using a Hodrick-Prescott smoothing function with a Lambda of
5.
Note on the FNB Valuers’ Market Strength Index: *When an FNB valuer values a property, he/she is required
to provide a rating of demand as well as supply for property in the specific area. The demand and supply
rating categories are a simple “good (100)”, “average (50)”, and “weak (0)”. From all of these ratings we
compile an aggregate demand and an aggregate supply rating, which are expressed on a scale of 0 to 100.
After aggregating the individual demand and supply ratings, we subtract the aggregate supply rating from
the demand rating, add 100 to the difference, and divide by 2, so that the FNB Valuers’ Residential Market
Strength Index is also depicted on a scale of 0 to 100 with 50 being the point where supply and demand are
equal.
JOHN LOOS:
HOUSEHOLD AND PROPERTY SECTOR STRATEGIST
087-328 0151
John.loos@fnb.co.za
The information in this publication is derived from sources which are regarded as accurate and reliable, is of a general nature only, does not constitute
advice and may not be applicable to all circumstances. Detailed advice should be obtained in individual cases. No responsibility for any error, omission
or loss sustained by any person acting or refraining from acting as a result of this publication is accepted by Firstrand Group Limited and / or the
authors of the material.
First National Bank – a division of FirstRand Bank Limited. An Authorised Financial Services provider. Reg No. 1929/001225/06