Growth in Free State Property Market

The Free State economy may be growing at a slightly slower pace than a few months ago, but the BoE Private Clients' Free State Barometer still offers much good news for the local business sector.

Property transfers, which were 11.9% up year-on-year (y/y), outpaced vehicle sales (9.5% up) for the first time since 2010. This indicates a mild recovery in the local property market, said Mike Schüssler of Economists.co.za, who compiled the provincial barometers.

Another good sign is that the number of new home loans registered increased 8.7% y/y in January – the strongest growth in seven months.

“Banks are showing signs that in some cases they are more inclined to consider 100% loans.

“The lending rate is however tight and there is rarely talk of rates below the level of prime,” said Libo van Aswegen, an attorney at local attorney firm Naudes.

Advertising in the Free State business sector is booming and advertising sales continue to improve. In January, 31.4% more advertisements were sold than in the previous year. This compares well with figures from the other provinces, for example the Eastern Cape (3.7% down).

The province’s transport index (17.7% up on the year before) and broad trade index (7.4% up) are currently driving the provincial economy.

Land transport in the Free State increased 7.1% but petrol sales were weak, mainly because of pressure from high prices.

Retail sales in the province (7.2% up) were strong, but Schüssler warned that consumers cannot continue spending at the same high tempo.

“Sometime or other they will have to tighten their belts, and this will affect sales of luxury goods and vehicles in particular.”

Attracting national retailers

National retailers however still see potential in the province, and earlier this month it was announced that the first Free State Makro would open its doors in Bloemfontein in October.

The agricultural index is still 9.8% down on the previous year owing to unfavourable weather. According to Wayne Kriel, the Free State regional head of First National Bank’s commercial banking services, good rains fell in certain areas, but some districts are still experiencing drought and damage to grain crops is evident in certain parts.

“With the late rains planting was late and follow-up rains were also too late in places. Water table plantings however look good and in general it should be a reasonable year, especially with current maize prices,” said Kriel.

The only economic sector lagging badly is construction (38.2% down y/y). Interested parties point out that there are currently few large construction projects in the province.

“Construction companies and consulting engineering firms are indeed busy, but everyone will tell you that they could be much busier,” said Delarey Bakkes, who chairs the Bloemfontein branch of the South African Institution of Civil Engineering.