Big house, better value

Johannesburg - Large houses have shown the greatest resilience in the face of South Africa's first recession in over a decade, according to data released on Monday.

According to Absa's House Price Index the average large house (221m² to 400m²) lost 3.7% of its price in December 2009, compared to the same period in 2008. Small- and medium-sized homes lost 6.6% and 6.9% of their value respectively, compared with December 2008.

Although still lower than pre-financial crisis prices, large home prices have shown a gradual recovery since February 2009.

"[Large houses] have shown positive growth for a decent while now," said Absa's senior property economist Jacques du Toit. "The wealthier households are a little more resistant against the [downturn in the] economy. Debt caught up much faster with the poorer households."

The average price for a small house (80m² to 140m²) in December was R670 000, while the average medium-sized house (141m² to 220m²) cost R941 000 and a large house R1 398 700.

According to figures released earlier by Standard Bank's home loans department, consumers are still in a debt dilemma. Of the 18.01 million credit-active consumers at the end of September 2009, only 9.9 million (55%) were in good standing. Three million (17%) were more than three months in arrears, and 2.7 million (15%) landed up on adverse listings.

According to Du Toit, financial strain on consumers is expected to let up in the second half of the year.

"Keeping in mind that the positive effect of lower interest rates will gradually wear off towards the end of the year, nominal house price growth of about 6% in 2010 is currently projected," Du Toit said.

- Fin24.com