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House prices gallop at a brisk pace

House prices gallop at a brisk pace

The FNB House Price Index is based on the median house price from Deeds Office data., based on bonds registered for natural persons.
The third quarter of 2015 saw favourable volumes seeping into the market as new residential property reach completion. On a quarterly basis, the price index advanced 22%, supported mainly by price growth during September. The volume index growth edged higher than 12% which is the fastest quarterly growth since 2013. Current growth in prices stems from the Windhoek area albeit growth in volumes seems to be a result of transactions within the towns of Swakopmund and Walvis Bay. Northern towns have further drawn attraction with prices in the region edging 21.5% higher and volumes increasing by 10.1%.
Central Property prices continue to climb
At the end of the third quarter we found that central property prices grew substantially with data from Windhoek indicating a 27% growth in median prices while prices in the Okahandja area grew by 13.8%. In Gobabis, property prices grew by 16.3% while number of transactions tripled in that area. In Windhoek, prices in Academia increased by 76% pushing median prices to N$1.9million. In Cimbebasia median prices have increased to N$1.6 million but offer better value for money based on the average stand size of 341sqm compared to central Windhoek. Overall Volumes in the central region have increased by 15% for the quarter with most transactions emanating from Katutura, Otjomuise and Khomasdal. Dorado Park prices and volumes have improved drastically from the first two quarters of 2015.
Coastal property volumes
Coastal volumes have shown substantial increase in the third quarter with 12% increase across the three major towns. Median prices have increased with 11% for the quarter recording N$975,000 at the end of September.
Transactions for the top end of the market are down 38% quarter on quarter with median price currently at N$2.5mn possibly linked to slowdown in tourist activity that was experienced in 2015. Swakopmund recorded the highest quarterly growth volumes 56% due to increased economic activity and new property developments. Prices in Swakopmund are up 23% while in Walvis Bay and Henties Bay the growth was recorded at 13% and 6% respectively.
Northern towns housing index 22% up
Prices of houses in the Northern regions recorded an overall growth of 22% quarter on quarter as areas like Ongwediva and Tsumeb record significant transactions during the quarter. Tsumeb recorded a growth of 30.0% pushing the median price in the area to N$829,000 while in Ongwediva, prices edged jumped by 18%. Median prices within North East Namibia (specifically town areas) are N$640,000 at the end of third quarter but with stand sizes that equate to 564m2 giving more value per sqm of land. Transaction wise, volumes were up 10% for the quarter based on transactions in the following towns: Ondagwa; Otjiwarongo; Tsumeb; Eenhana. Ondangwa recorded 75 transactions for the third quarter making it the fastest growing Northern town.
Southern property a complete dud
Median prices in Keetmanshoop and Luderitz edged to N$700,000 by the end of the third quarter. Most transactions were recorded in Luderitz but with low median prices at N$440,000. The most expensive property was in Keetmashoop valued at N$900,000. The South remains a region with very low transactions and hardly any movement in property prices.
Land delivery recovers
Land delivery continues steadily across coastal and northern Namibia with a 57% increase in new stands during the third quarter. The spike in new stands was mainly a result of coastal developments which have grown sharply since August 2015. In total 258 stands were mortgaged representing a 62.9% improvement for the quarter.
The third quarter received the highest volume in transactions since the third quarter of 2013. This is a positive sign for the market indicating that despite the quick rise in property prices the demand for housing has not eased. We therefore anticipates that fourth quarter numbers will reveal higher volumes and higher prices than initially estimated. We expect average growth in prices for 2015 to be 17% and average volume growth to be 14%. In 2016 and beyond, the main concern will be jolting the supply side in order to cater to new entrants in the market (home owners). In terms of market dynamics, there has been a 44% decline for housing in the medium to upper end in favour of property well under N$1mn over the past year. The shift in demand is not only in the pricing but also in location with a 13% increase in property demanded at the coast and in northern towns versus property in Windhoek. The trend is likely to continue into 2016 unless further measures are taken to address the current structural bottlenecks.

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Sanlam 2018 Annual Results

7 March 2019


Sanlam’s 2018 annual results provides testimony to its resilience amid challenging operating conditions and negative investment markets

Sanlam today announced its operational results for the 12 months ended 31 December 2018. The Group made significant progress in strategic execution during 2018. This included the acquisition of the remaining 53% stake in SAHAM Finances, the largest transaction concluded in the Group’s 100-year history, and the approval by Sanlam shareholders of a package of Broad-based Black Economic Empowerment (B-BBEE) transactions that will position the Group well for accelerated growth in its South African home market.

Operational results for 2018 included 14% growth in the value of new life insurance business (VNB) on a consistent economic basis and more than R2 billion in positive experience variances, testimony to Sanlam’s resilience in difficult times.

The Group relies on its federal operating model and diversified profile in dealing with the challenging operating environment, negative investment markets and volatile currencies. Management continues to focus on growing existing operations and extracting value from recent corporate transactions to drive enhanced future growth.

The negative investment market returns and higher interest rates in a number of markets where the Group operates had a negative impact on growth in operating earnings and some other key performance indicators. This was aggravated by weak economic growth in South Africa and Namibia and internal currency devaluations in Angola, Nigeria and Zimbabwe.

Substantial growth in Santam’s operating earnings (net result from financial services) and satisfactory growth by Sanlam Emerging Markets (SEM) and Sanlam Corporate offset softer contributions from Sanlam Personal Finance (SPF) and Sanlam Investment Group (SIG).

Key features of the 2018 annual results include:

Net result from financial services increased by 4% compared to the same period in 2017;

Net value of new covered business up 8% to R2 billion (up 14% on a consistent economic basis);

Net fund inflows of R42 billion compared to R37 billion in 2017;

Adjusted Return on Group Equity Value per share of 19.4% exceeded the target of 13.0%; and

Dividend per share of 312 cents, up 8%.

Sanlam Group Chief Executive Officer, Mr Ian Kirk said: “We are satisfied with our performance in a challenging operating environment. We will continue to focus on managing operations prudently and diligently executing on our strategy to deliver sustainable value to all our stakeholders. The integration of SAHAM Finances is progressing well. In addition, Sanlam shareholders approved the package of B-BBEE transactions, including an equity raising, at the extraordinary general meeting held on 12 December 2018. Our plan to implement these transactions this year remains on track.”

Sanlam Personal Finance (SPF) net result from financial services declined by 5%, largely due to the impact of new growth initiatives and dampened market conditions. Excluding the new initiatives, SPF’s contribution was 1% down on 2017 due to the major impact that the weak equity market performance in South Africa had on fund-based fee income.

SPF’s new business sales increased by 4%, an overall satisfactory result under challenging conditions. Sanlam Sky’s new business increased by an exceptional 71%. Strong growth of 13% in the traditional individual life channel was augmented by the Capitec Bank credit life new business recognised in the first half of 2018, and strong demand for the new Capitec Bank funeral product. The Recurring premium and Strategic Business Development business units also achieved strong growth of 20%, supported by the acquisition of BrightRock in 2017. Glacier new business grew marginally by 1%. Primary sales onto the Linked Investment Service Provider (LISP) platform improved by 5%, an acceptable result given the pressure on investor confidence in the mass affluent market. This was however, offset by lower sales of wrap funds and traditional life products.

The strong growth in new business volumes at Sanlam Sky had a major positive effect on SPF’s VNB growth, which increased by 7% (14% on a comparable basis).

Sanlam Emerging Markets (SEM) grew its net result from financial services by 14%. Excluding the impact of corporate activity, earnings were marginally up on 2017 (up 8% excluding the increased new business strain).

New business volumes at SEM increased by 20%. Namibia performed well, increasing new business volumes by 22% despite weak economic conditions. Both life and investment new business grew strongly. Botswana underperformed with the main detractor from new business growth being the investment line of business, which declined by 24%. This line of business is historically more volatile in nature.

The new business growth in the Rest of Africa portfolio was 68% largely due to corporate activity relating to SAHAM Finances, with the East Africa portfolio underperforming.

The Indian insurance businesses continued to perform well, achieving double-digit growth in both life and general insurance in local currency. The Malaysian businesses are finding some traction after a period of underperformance, increasing their overall new business contribution by 3%. New business production is not yet meeting expectations, but the mix of business improved at both businesses.

SEM’s VNB declined by 3% (up 6% on a consistent economic basis and excluding corporate activity). The relatively low growth on a comparable basis is largely attributable to the new business underperformance in East Africa.

Sanlam Investment Group’s (SIG) overall net result from financial services declined by 6%, attributable to lower performance fees at the third party asset manager in South Africa, administration costs incurred for system upgrades in the wealth management business and lower earnings from equity-backed financing transactions at Sanlam Specialised Finance. The other businesses did well to grow earnings, despite the pressure on funds under management due to lower investment markets.

New business volumes declined by 13% mainly due to market volatility and low investor confidence in South Africa. Institutional new inflows remained weak for the full year, while retail inflows also slowed down significantly after a more positive start to the year. The international businesses, UK, attracted strong new inflows (up 57%).

Sanlam Corporate’s net result from financial services increased by 4%, with the muted growth caused by a continuation of high group risk claims experience. Mortality and disability claims experience weakened further in the second half of the year, which is likely to require more rerating of premiums in 2019. The administration units turned profitable in 2018, a major achievement. The healthcare businesses reported satisfactory double-digit growth in earnings, while the Absa Consultants and Actuaries business made a pleasing contribution of R39 million.

New business volumes in life insurance more than doubled, reflecting an exceptional performance. Single premiums grew by 109%, while recurring premiums increased by a particularly satisfactory 56%.

The good growth in recurring and single premium business, combined with modelling improvements, supported a 64% (71% on a comparable economic basis) increase in the cluster’s VNB contribution.

Following a year of major catastrophe events in 2017, Santam experienced a relatively benign claims environment in 2018. Combined with acceptable growth in net earned premiums, it contributed to a 37% increase in gross result from financial services (41% after tax and non-controlling interest). The conventional insurance book achieved an underwriting margin of 9% in 2018 (6% in 2017).

As at 31 December 2018, discretionary capital amounted to a negative R3.7 billion before allowance for the planned B-BBEE share issuance. A number of capital management actions during 2018 affected the balance of available discretionary capital, including the US$1 billion (R13 billion) SAHAM Finances transaction. Cash proceeds from the B-BBEE share issuance will restore the discretionary capital portfolio to between R1 billion and R1.5 billion depending on the final issue price within the R74 to R86 price range approved by shareholders.

Looking forward, the Group said economic growth in South Africa would likely remain weak in the short to medium term future, and would continue to impact efforts to accelerate organic growth. The outlook for economic growth in other regions where the Group operates is more promising. Recent acquisitions such as the SAHAM transaction should also support operational performance going forward.

“We remain focused on executing our strategy. We are confident that we have the calibre of management and staff to prudently navigate the anticipated challenges going forward,” Mr Kirk concluded.

Details of the results for the 12 months ended 31 December 2018 are available at