Johannesburg - House prices are set to rise again in the near future, Absa said on Wednesday.
In its latest house price index, it found that nominal
year-on-year price deflation in the housing market had slowed down further in September 2009.
"If the latest trends are to continue, house prices may start to rise on an annual basis before the end of the year," Absa's seniorproperty analyst Jacques du Toit said.
On a month-on-month basis, prices continued to rise in September after reaching a lower turning point in April this year.
Absa said that middle-segment house prices were down by a
nominal 0.3% year-on-year to R966 300 in September 2009, from a revised -1.1% year-on-year in August.
On a monthly basis, house prices increased by a nominal 0.8% in September, from a revised increase of 0.9% in August
Absa said that by September, the average house price was 3.4
percent up on the low reached in April 2009.
In real terms, house prices in the middle segment were down by
7.1% year-on-year in August (versus -8.2% year-on-year in July).
Prices of small houses (80m²-140m²) were a nominal 4.2%
year-on-year lower in September (versus -4.4 year-on-year in August after revision).
"This brought the average nominal price of houses in this
segment to about R651 400 in September," Du Toit said.
In real terms, the average price of houses in this segment of
the market was 10.2% year-on-year lower in August, after
declining by 10.6% year-on-year in July.
"This brought the average nominal price of houses in this
segment to about R651 400 in September."
Du Toit said that in real terms, the average price of houses in
this segment of the market was 10.2% year-on-year lower in
August, after declining by 10.6% year-on-year in July.
With regard to medium-sized houses (141m²-220m²), the average
nominal price declined by 5.2% year-on-year in September
(versus -4.7% year-on-year in August after revision), which brought prices in this category of housing to an average of
R901 700.
According to Absa, this translated into a real price decline of
10.4 percent year-on-year in August (versus -10.2% year-on-year in July).
Absa said the average nominal price of large houses
(221m²-400m²) was up by 2.7% year-on-year in September, (up 1.9% year-on-year in August after revision).
"This brought the average nominal price to R1 416 400 in September, which was R53 500 higher after bottoming at a level of R1 362 900 in February this year," Du Toit said.
In real terms, the average price of large houses was down by 4.2% year-on-year in August, compared with a decline of 5.3% year-on-year recorded in July.
Du Toit said the residential property market was still
experiencing tough times on the back of an economy that was in
recession, "which adversely impacts the household sector over a
wide front".
There were, however, indications that the worst might be over
for the local economy and that a recovery was to commence towards the end of the year, Du Toit said.
"House price trends appear to have turned the corner and with
mortgage interest rates down by 500 basis points compared with late last year, as well as the recently selective relaxation of mortgage lending criteria by banks, property market conditions in general are expected to improve, but the process of recovery will most probably be slow and gradual," he said.
In view of nominal year-on-year house price deflation slowing
down over the past few months, prices might start rising on an
annual basis again in the near future if current trends were to
continue.
Based on these trends as well as nominal price deflation of 2.1% on average in the first nine months of 2009 compared with
the same period in 2008, prices may record a decline of less than 2% for the full year, Du Toit said.
In real terms, house prices were forecast to decline by around
nine percent this year.
In 2010, nominal price growth of between two percent and three
percent was expected, with prices forecast to decline somewhat
further in real terms next year based on projections for nominal
house price growth and headline consumer price inflation, Absa
said.
- Sapa