Johannesburg - The year-on-year growth rate for house prices has started to decline, possibly due to the country's slowing economy, FNB said on Wednesday.
The FNB house price index showed a slight decline in its year-on-year growth rate in July, from a revised 8.4% in June to 8.3% in July.
"The start of a slowing year-on-year growth rate has been anticipated in recent months, due to the fact that the month-on-month seasonally-adjusted growth rate has been broadly losing steam since a January peak," the bank said.
It said the start of a loss of price growth momentum was believed to be the result of a slowing economic growth rate.
"After 3.2% quarter-on-quarter annualised gross domestic product (GDP) growth in the final quarter of 2011, the first quarter growth rate [for 2012] slowed to 2.7%, and certain high frequency economic indicators suggest a good possibility that the second quarter may have been an even slower growth quarter," FNB said.
It said a broad slowing of the year-on-year rate was again "the order of the day in the near term".
"Some may argue that the July interest rate cut will breathe some life into the residential market. It will indeed be a minor stimulus, and one may see a month or two's slight acceleration in month-on-month house price growth," the bank said.
"But beyond that, we don't think it will totally offset the negative impact of a slowing domestic economic growth rate, and with it a slowing wage bill growth rate."
FNB said it anticipated a year-on-year growth rate of around 5% or 6% by the end of the year.
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