Factors influencing the residential property cycle in South Africa

Myburgh, Craig (2008-12)

Thesis (MBA)--Stellenbosch University, 2008.


ENGLISH ABSTRACT: Internationally, a number of studies on property cycles have been undertaken. In contrast very little academic research has been undertaken in South Africa. The importance of the subject is once again become evident given the recent global turbulence in both property and credit markets. The central hypothesis of this study is that there exists a residential property cycle in South Africa and that it can be identified and that furthermore there are indicators that can identify the various stages that the property market finds itself in and that these indicators can be used to forecast the property cycle. A number of potential drivers of the property cycle were identified and analysed. These drivers collectively propel the property cycle through its various cycle stages. Not one of the drivers in isolation has the ability to move the cycle; it is rather the correct combination of drivers at the right time that have the necessary impact to make the changes in property price levels. The study has identified the historical residential property cycle in South Africa and identified the primary drivers of the property cycle. It was found that Interest Rates, GOP, Population, Household Debt to Disposable Income ratio, Quantity of Building Plans Approved and Building Cost Escalation are all material drivers in defining the property cycle. A statistical analysis in the form of multiple regression was applied to the above variables and a statistical model was developed to forecast the property cycle. It was found that the model has significant explanatory powers when the goodness of fit was tested.

AFRIKAANSE OPSOMMING: Die sentraal onderstelling van hierdie studie is dat daar 'n residensiele eiendom kringloop in Suid-afrika bestaan en dat dit geidentifiseer kan wees en dat bowendien daar aanwysers wat die verskeie stadiums van die eiendom mark kan identifiseer vind en dat hierdie aanwysers gebruik kan word vir voorspelling van die eiendom kringloop. 'n Aantal potensiele drywers van die eiendom kringloop was geidentifiseer en gean ali seer. Hierdie drywers gesamentlik dryf die eiendom kringloop deur sy verskeie kringloop stadiums voort. Nie een van die drywers in isolasie het die vermoe om die kringloop te beweeg nie; dit is liewer die korrekte kombinasie van drywers op tyd wat die nodige impak het om die veranderinge in eiendom prys vlakke te maak. Die studie het die historiese residensiele eiendom kringloop in Suid-afrika geidentifiseer en die primere drywers van die eiendom kringloop. Dit was gevind dat Rentekoerse, GOP, Populasie, Huishouding Skuld tot Weggooibare Inkomste Verhouding, Hoeveelheid van Gebou Pia nne Goedgekeur en Gebou Kos Eskilasie is almal materiaal drywers in definieer van die eiendom kringloop. 'n Statisties analisering was aangewend aan die bo onkonstante en 'n statistiese skema was ontwikkel om voorspelling van die eiendom kringloop te bepaal. Dit was gevind dat die skema beduidende verduidelike kragte het wanneer die goedheid van pas getoets was.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/15053
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