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Johannesburg - South African median home prices were flat in December 2007 after moderating to 6.5% year-on-year (y/y) in
November from 10.2% y/y growth in October, Standard Bank's property gauge shows.
In level terms, the median house price was recorded at R550 000, bringing the five-month moving average growth rate to 5.6% y/y.
House prices have been pulling back from their peak of 35.5% y/y growth in October 2004 as higher interest rates and tougher credit-granting laws eat into buyers' pockets.
The average rate of growth for 2007 as a whole was 8.3%, the lowest average house price growth in the residential property prices in seven years.
Interpret with caution
However, between January 2000 and December 2007 residential property prices as measured by the Standard Bank median house price index increased by 182% in contrast to the goods price inflation rate of 60% in the same period, giving a holding period return of 122% in real terms.
The unchanged December growth rate in the median house price of should be interpreted with some caution, Standard Bank said.
It added that, as usual, mortgage volumes were lower in
December, but the past December's volumes were lower than past year-end experiences and might have resulted in downward distortion of the median house price.
Cheaper homes more popular
In addition, the proportion of transactions in the lower-priced bands also increased above their 12-month average. This may have pulled the December median house price down, the bank added.
"The persistence of this trend could be a sign of home buyers shifting to lower-priced homes as a result of a reduction in affordability, but it would be imprudent to reach such a conclusion on the basis of one month's data," the bank said.
Looking forward, the bank expected low single-digit y/y growth rates for 2008 with a possibility of negative growth in some months, citing higher interest rates and moderation in economic growth.
- I-Net Bridge