Property Talk

An international view of the global housing and mortgage outlook for 2015 is always interesting especially when we are able to position South Africa relative to a sizable group of other countries. The recently published report by Fitch Ratings, the international ratings agency, provides an insightful overview of the global housing market based on the 22 countries included in the report. In a nutshell there is an increasingly positive outlook overall due to better macro-economic conditions, low interest rates and for some markets improvements in affordability.

The potential threats are embodied in the risk of rising interest rates for some markets such as the US and South Africa, or deflationary pressures in the Eurozone, which has the weakest outlook. The broad predictions for 2015 mortgage arrears and house price growth by Fitch actually puts South Africa at the very top end of the spectrum in terms of house price growth (predicts 7,5% growth for 2015) and a neutral prediction for the change in overall mortgage arrears.

Countries such as Greece (-4%), Singapore (-3%), Italy (-1,8%) and France (-2%) are on the opposite side of the spectrum in terms of expected house price growth, with most countries expected to have a neutral arrears status. Brazil and Mexico are expected to have positive house price growth rates of 6,4% and 4% respectively, but also a growth in arrears while Ireland is expected to have an improvement in its mortgage arrears status with positive house price growth of 4%. Countries such as the UK, Netherlands, Denmark, Ireland, Spain and South Africa are expected to lead the new mortgage growth rates for 2015.

It is interesting to note that South Africa (9,3%), Brazil (9%) and Mexico (10,8%) have the highest average mortgage rates of the 22 countries surveyed. South Africa's average mortgage rate is predicted to increase to 10% for 2015. In the US average mortgage rates are predicted to increase from 4% to 4,5% in 2015. For the UK the expectation is an increase from 3,1% to 3,3%. The overall market evaluation for the US, Canada, UK, Germany, Netherlands, Belgium, Denmark and four countries in the Asia Pacific region, being Australia, Japan, South Korea and New Zealand are recorded as strong. South Africa is regarded as neutral in terms of their overall market evaluation. Greece is regarded as very weak which means it may still be a great property buying opportunity in that region.

In terms of the demand and supply of housing South Africa, Australia and Japan are at very different places. South Africa is characterized by very high housing demand but very low supply. This is the extreme opposite of Japan, which is indicated as having very high supply but low demand. This is explained as Japan feeling the effects of an aging population, but with Japanese buyers having a strong preference for new housing. In Australia there is both very high demand and very high supply to match this demand. Australia features high population growth through immigration as well as strong investor demand. On this measure Australia lives up to its reputation as being the "lucky country".

Fitch Ratings are of the opinion that consumer confidence drives household investment decisions and therefore measures this across the countries. Spain, Portugal and Ireland all show higher levels of consumer confidence as the recovery in the housing markets in those countries continues. The UK and Germany are shown to have higher and improved levels of confidence. Even in Japan, which has had its fourth recession since 2008, consumer confidence has improved. Australia has escaped a recession for 25 years and has constantly confident consumers providing a positive outlook for their mortgage and housing market.

For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.

Andreas Wassenaar

Principal - Seeff Dolphin Coast

Cell: 082 837 9094

andreasw@seeff.com