Standard Bank: Median house price down

Johannesburg, Dec 9 (I-Net Bridge) - Growth in Standard Bank's (smoothed) median house price (using the assessed values of those houses for which mortgage finance was approved by Standard Bank) experienced further easing, contracting by 1% year on year (y/y) in November, from -0.5% y/y in October.

SA's key economic sectors are under pressure, and may remain so, given the decline in global demand. Also, the labour intensiveness of these sectors might rein in future employment gains.

Household credit growth was reported to remain in low single digits along with house price growth.

Standard bank said that depressed consumer confidence and still-soft, albeit positive growth in household consumption, were corroborated by the cautious trend in credit uptake. Total credit extension to households ticked up to 5.3% y/y in October, after easing to 5.0% y/y in September. However, growth in mortgage advances eased marginally, to 2.1% y/y in October, from 2.2% y/y in September.

In addition, while the ratio of household debt to disposable income geared down in Q3:11, to 75.0%, from 75.8% in Q2:11, households still carried a sizeable debt burden, with the ratio of debt to disposable income not significantly different from its 2008 peak of 82.7%. Q3:11 GDP, at 1.4% quarter on quarter, confirmed that economic growth may be sluggish for longer than previously anticipated.

House price growth has remained rooted in low single digits throughout 2011, and this is likely to continue in 2012. SA's macroeconomic fundamentals indicate a lack of stimuli for the residential property market to return to double-digit y/y price growth.