1. MARCH 2010 UPDATE of S A RESERVE BANK Data Dr Johan Snyman STELLENBOSCH 25 March 2010

2. According to the SARB, trends and the slopes of the curve are more important than absolute levels. This implies that even though the line is at the same level as during the 2006/07 boom, the economy is not equally robust

3. Still declining

4. The residential investment data are dropping and conforming to the historical pattern

5. Indebtedness rose from 50% in 2003 to 83% in 2008Q1, currently declining, but only slowly …

6. Thanks to the 5 percentage point drop in interest rates, the debt-servicing ratio is also declining from a peak level of 12% to 8%

7. Building loans granted stabilised at low levels during 2009Q4

8. Some revival was evident in 2009Q4 in the case of mortgage advances for existing buildings

9. The drop from a peak level in August 2006, was no less than 94%, but this decline seems to have stabilised at extremely low levels

10. Non-residential investment has reached a peak

11. Growth rates are destined to become negative in accordance with the historical pattern

12. This graph shows that residential investment is currently smaller than non-residential investment

13. This graph shows that the amplitude of cyclical swings really has no regular pattern, sometimes res grows faster than non-res, sometimes the recessions in non-res are deeper than res

14. There is a close relationship between movements in non-residential investment and the rate of increase in tender prices, the more work available, the less competition in tendering and the faster tender prices rise … Note that tender price increases were negative in absolute terms at the end of 2009

15. Approaching a peak at an all-time high

16. Historically high rates of growth are evident, but these could fall rapidly as airports and soccer stadiums are completed

17. Despite many infrastructural projects, the majority of BER respondents remain pessimistic

19. Reasoning underlying the forecasts for 2010 Residential: (+3%) Prime interest rates have dropped from 15.5% to 10% p.a. Banks have relaxed their stringent lending requirements Consumer confidence is improving Salary and wages grew by more than inflation during 2009 Building costs are just 2.6% higher than a year ago The only negative influences are higher electricity tariffs and increases in property rates and taxes Non-residential: (-9%) Vacancies are rising, nominal rentals are no longer rising Construction works: (-3%) The level has reached an all-time high, yet contractors are pessimistic and various projects are in the completion stage, thus there is little scope for further growth, although levels will still be much higher than in 2000

20. Thank you for your attention … Johan Snyman mfa@iafrica.com