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Johannesburg - The renewed acceleration in house price growth, which resumed early in 2013 after a lull late in 2012, continued in June, according to the latest FNB House Price Index.
The average house price for June showed year-on-year growth of 6.6%, up from May’s revised 6.2%. The average value of homes transacted in the latest index was R891 266.
In real terms (adjusting house prices for general inflation in the economy using the CPI), there was a very slight year-on-year increase seen in May.
Consumer price inflation was at 5.6% year-on-year in that month, slightly lower than house price inflation.
In real terms the index is down 18.6% on last decade’s real price peak reached in November 2007, while in nominal terms it is a mere 15.7% higher.
However, compared to June 2003 the index is up 44.8% in real terms
and 148.8% in nominal terms.
According to FNB this suggests that the price effects of last decade’s residential demand boom have far from worn off, despite a significant downward real correction since late-2007.
According to FNB the combined impact of no interest rate cutting as of late and slowing disposable income growth could have constraining implications in terms of growth in residential demand in the near term.
Economic growth is looking set to battle to exceed 2% for 2013 as a whole, according to FNB.
The current level of interest rates set by the Sarb is at multi-decade lows and the stability of interest rates at these low levels has helped to gradually strengthen residential demand through 2012 and early-2013, demonstrates the index.
"It is, however, questionable whether this residential demand strengthening can continue at a time of clear economic weakness, and where a steady slowing in growth in the area of real consumer demand comes as a result," said FNB.
For 2013 as a whole, therefore, it expects that a weak economy and resultant weakened disposable income growth leads to the ongoing expectation that house price growth will continue to remain largely in single-digit territory in the near term.
This is due to potential pressure on demand not far outpacing consumer price inflation of near to 6%.
- Fin24
The average house price for June showed year-on-year growth of 6.6%, up from May’s revised 6.2%. The average value of homes transacted in the latest index was R891 266.
In real terms (adjusting house prices for general inflation in the economy using the CPI), there was a very slight year-on-year increase seen in May.
Consumer price inflation was at 5.6% year-on-year in that month, slightly lower than house price inflation.
In real terms the index is down 18.6% on last decade’s real price peak reached in November 2007, while in nominal terms it is a mere 15.7% higher.
However, compared to June 2003 the index is up 44.8% in real terms
and 148.8% in nominal terms.
According to FNB this suggests that the price effects of last decade’s residential demand boom have far from worn off, despite a significant downward real correction since late-2007.
According to FNB the combined impact of no interest rate cutting as of late and slowing disposable income growth could have constraining implications in terms of growth in residential demand in the near term.
Economic growth is looking set to battle to exceed 2% for 2013 as a whole, according to FNB.
The current level of interest rates set by the Sarb is at multi-decade lows and the stability of interest rates at these low levels has helped to gradually strengthen residential demand through 2012 and early-2013, demonstrates the index.
"It is, however, questionable whether this residential demand strengthening can continue at a time of clear economic weakness, and where a steady slowing in growth in the area of real consumer demand comes as a result," said FNB.
For 2013 as a whole, therefore, it expects that a weak economy and resultant weakened disposable income growth leads to the ongoing expectation that house price growth will continue to remain largely in single-digit territory in the near term.
This is due to potential pressure on demand not far outpacing consumer price inflation of near to 6%.
- Fin24
