Reserve Bank News

Category News

According to the Reserve Bank quarterly bulletin released last week, distressed sales and auctions of residential property fell last year from 2009. The reduction in forced sales however could be due to reduced demand by potential buyers experiencing a "financial squeeze". The average price of residential property as suggested by some of the major banks had risen last year April by 13% year-on-year, but by last month this had reversed and prices had contracted by 1% year -on-year. With vast number of households heavily in debt, it would appear that house prices are going to remain relatively static for the remainder of the year especially as interest rates are unlikely to reduce in the coming months. From an Industrial point of view consolidation by the big players seems to have run its course and it now appears that economic recovery is on the way albeit very slowly. Confirmation to this effect is that 101 000 jobs were created in the non-farming section of the economy during its last quarter of 2010. This followed the addition of nearly 70 000 new jobs in the previous two quarters. In the New Germany industrial area of Pinetown, the Frame Group are redeveloping a portion of its Escom road property to be known as New Germany Industrial Park. The project comprising the conversion of approximaley 113 000sqm of existing textile mills to Factory/Warehouses with a minimum extent of 1000sqm. At the time of writing, commitment has been received for approximately a third of the projected development with a further 40% currently in negotiation. Notwithstanding the "Frame" development mini units smaller than 300sqm are in greater demand than in the second half of last year, although rentals have not escalated and in some instances even reduced. Overall it would seem that the large corporates are more bullish than their smaller counterparts, who are taking one step at a time very cautiously.