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Leading Economic Indicators: August 2010 MFA Update

Written by  Dr Johan Snyman
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SARB Leading Indicator, Vehicle Sales, Transfer Duty & House Prices


The SARB leading indicator dropped marginally, possibly reflecting some moderation in the economic growth rate …


… yet, the annual percentage increase is very high because of comparative base effects (i.e. current levels are being compared to very low levels a year ago)

SARB Composite Leading Indicator Annual percentage change

Vehicle sales have benefited from World Cup purchases and comparative base effects … the time series plans passed is forming a trough.

Comparison Total Vehicle Sales & Total Real Residential Plans Passed

In percentage change terms, vehicle sales are performing well (+23% year-on-year), partly because of comparative base effects.  In the near future this leading indicator is expected to moderate as higher current levels will be compared to higher levels a year ago

Total Vehicle Sales & Total Residential Plans passed Annual Percentage Change

The trend in the residential property market is still upward …

Transfer Duty at Current Prices

… yet, in real terms, the revival is not as robust as was the case in 1999 because mortgage finance is currently scarce

Rand Million at Constant 2009 Prices

In percentage change terms the rise is conforming to pattern.  Note that early in the upswing phase of the business cycle the growth rate is robust, but as can be seen in the circled areas, after a while it tapers off.

Annual Percentage Change in REAL Terms

Nominal house price increases are taking a breather

Real house prices are still below their peak levels in 2007

Even though the time series Transfer Duty Paid is more volatile than House Prices, they seem to reflect similar trends – currently positive, but both moving sideways

Annual Percentage Change in REAL Terms

Dr Johan Snyman

Dr Johan Snyman

Johan Snyman obtained his BComm and MComm in Economics at the University of Stellenbosch, and complete his doctorate at the University of Cape Town.  He spent 8 years working as an economist at the Bureau for Economic Research, University of Stellenbosch and then established a private consulting firm, becoming Director of Medium-Term Forecasting Associates, a company specializing in research into building cycles and building costs.

In 2007 he was appointed Adjunct Professor in the Department of Construction Economics and Management at the University of Cape Twon.