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Johannesburg - SA's housing slump could get worse before it gets better, the latest data from a number of residential property players indicate.
Standard Bank's monthly property gauge released on Monday shows that house price growth remains in negative territory with median prices down -1.8% in August.
That is the sixth consecutive month that median house prices fell and brings the five month moving average to -7.7%.
Standard Bank economist Johan Botha says he doesn't expect a housing market recovery anytime soon. "Residential property will remain in the doldrums until fundamental drivers such as disposable income and interest rates turn the corner. The first signs of a looser monetary policy are only expected well into 2009."
Others are less bullish with Rael Levitt, CE of auctioneers and valuators the Alliance Group, expecting the market to remain depressed until end 2009.
Levitt says the massive increase in distressed sales coming on to Auction Alliance's trading floors in recent months indicate that property owners will remain burdened with the high cost of borrowing for some time to come.
The Alliance Group has seen a ten-fold increase in the number of distressed or forced sales over the past year, where homeowners can no longer afford to hold on to their properties.
Levitt says the company will put 123 residential properties up for auction in September alone. In September 2007 the group handled only 12 forced sales.
The huge increase in properties being dumped on the market has placed substantial pressure on values. Levitt says the upper-middle end of the market priced between R1.5m to R3m is taking the biggest knock with values dropping by up to 30% on an annualised basis.
Figures released last week by SA's largest estate agency group RE/MAX of Southern Africa, in conjunction with BetterBond, collaborates with Levitt's data.
According to RE/MAX the number of property sales valued between R1.5m and R2.5m has dived by a staggering 50% from January to July 2008 (y-o-y). That compares to an overall 38% drop in housing transactions across all price brackets.
The only sector of the market that is still showing some sign of life is the affordable end priced below R500 000. RE/MAX marketing and finance director Jeanne van Jaarsveldt says there has been a major shift towards cheaper properties, as affordability becomes a key driver of home buying decisions.
RE/Max figures show that nearly half (43%) of all property transactions that took place between January and July were valued at less than R499 000.
That compares to only 1% of all sales falling within the top-end priced at R2.5m and above.
Latest figures from property research portal the SA Property Transfer Guide (SAPTG) show a similar trend, with SAPTG data coming directly from the Deeds Office.
SA SAPTG national training manager Dieter Deppisch says it's true that there are areas where house prices have fallen by 30% to 40% and even more over the past year. "But the fall in property value has been largely confined to the middle sector of the residential market."
Deppisch says the affordable end of the market is still showing growth, both in terms of volumes and prices. He says average prices in the Gauteng suburb of Protea Glen on the outskirts of Soweto have, for instance, risen 19% from January to July 2008 (y-o-y), from R239 328 in 2007 to R285 000 in 2008. The number of housing sales in Protea Glen was up 6% over the same period.
- Fin24.com