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Johannesburg - Standard Bank's median house price index recorded an unexpected rise of 3.6% in September year-on-year, the first time since November 2007 that the bank's monthly property gauge is back in positive growth territory. Median house prices, as measured by housing sales financed by Standard Bank, were still falling by -1,8% in August.
Standard Bank economist Johan Botha says it's too early to say whether September's up-tick is in fact the beginning of a trend reversal. He says it's more likely that the 3.6% rise is due to the volatility of house price data.
Even so, Botha concedes that September's positive house price performance shows that there is still some life left in the residential property market.
He believes that the housing market will remain in the doldrums until second quarter 2009, when interest rates are likely to be cut for the first time.
FNB property strategist John Loos agrees with Botha that the housing market is unlikely to stage a noticeable recovery before April next year once interest rates are cut.
FNB's house price index released on Wednesday shows average house price growth slowing further in September to 1.8%, down from 2.9% in August. Loos notes in real terms (adjusted for inflation) average house prices have now tumbled close to -10% over the past year.
Lower income blues
However, Loos says it appears that the higher segment of the market may well be weathering the property slump better than the more affordable end and may be close to its bottom.
He says lower income areas have probably been harder hit in recent months by higher consumer price inflation and stricter credit lending introduced by the NCA than upper income suburbs.
Figures from estate agents support Loos' view. RE/MAX Atlantic seaboard principal Steven Delit's research shows that average house prices in Cape Town's upmarket beach belt area stretching from Greenpoint to Camps Bay were still up a robust 32% for the year to date (January to August).
SA Property Transfer Guide reveals a similar trend for wealthy Gauteng suburbs. For instance, average house prices in posh Sandhurst and Bryanston were still rising by 49% and 31% respectively between January and July.
- Fin24.com