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Johannesburg - Median house prices in South Africa have increased 7.3%
year-on-year (y/y) to R597 160 in July from a revised R592 500,
or 3.2% y/y, in June, according to Standard Bank's latest index on
Tuesday.
Following relatively pedestrian growth in the median property price over the past few months, July marked the first month of real growth in the sector.
The median house price increased by a further 0.8% month-on-month (m/m) in July (2.3% m/m in June), marginally above the average monthly increase of 1.2% recorded since the start of the year, signalling an improvement in both demand and supply fundamentals.
The bank said although this increase is sharp, it needs to be borne in mind that this improvement is from a very low base in 2009, when the median price contracted by around 5%.
In real terms, the median price jumped to 3.2% y/y from -1.0% y/y in June, in part also due to the falling inflation profile.
Standard Bank expects inflation to moderate to 3.9% y/y in July from 4.2% y/y in June.
"Today's data provide confirmation that the recovery in the property market is gaining traction. This improvement was expected, especially since the low base levels in the second half of last year were set to buoy growth in the second half of this year. However, fundamentals are also improving, mirrored by increasing discretionary spending, such as passenger car sales which rebounded to 27.6% y/y in July from 14.4% y/y in June," said economist from the bank, Danelee van Dyk.
However, Van Dyk warned that the increase in median house price does not suggest that the employment environment is improving sufficiently to boost property growth just yet, but the rate of deterioration is slowing.
With the market remaining affordable from both inflation and borrowing cost perspectives, further improvements are envisaged, the report indicates.
At the current rate of improvement and factoring in seasonal effects, the market is set to show average nominal growth of around 6% in 2010, and 1.2% in real terms.
The outlook over the next year or so, however, remains clouded by external growth concerns.
Homeowners' own assessment of potential rental income is improving relative to actual rental inflation, providing tentative signs that
confidence in the property market is slowly returning, according to Van Dyk.
While several headwinds to growth remain, such as weak employment market conditions, slowing economic growth and rising administered prices, confidence in the property market is returning.
Standard Bank expects the second half of the year to yield higher growth in the median price, with average nominal growth envisaged at around 6% for the year.
- I-Net Bridge
Following relatively pedestrian growth in the median property price over the past few months, July marked the first month of real growth in the sector.
The median house price increased by a further 0.8% month-on-month (m/m) in July (2.3% m/m in June), marginally above the average monthly increase of 1.2% recorded since the start of the year, signalling an improvement in both demand and supply fundamentals.
The bank said although this increase is sharp, it needs to be borne in mind that this improvement is from a very low base in 2009, when the median price contracted by around 5%.
In real terms, the median price jumped to 3.2% y/y from -1.0% y/y in June, in part also due to the falling inflation profile.
Standard Bank expects inflation to moderate to 3.9% y/y in July from 4.2% y/y in June.
"Today's data provide confirmation that the recovery in the property market is gaining traction. This improvement was expected, especially since the low base levels in the second half of last year were set to buoy growth in the second half of this year. However, fundamentals are also improving, mirrored by increasing discretionary spending, such as passenger car sales which rebounded to 27.6% y/y in July from 14.4% y/y in June," said economist from the bank, Danelee van Dyk.
However, Van Dyk warned that the increase in median house price does not suggest that the employment environment is improving sufficiently to boost property growth just yet, but the rate of deterioration is slowing.
With the market remaining affordable from both inflation and borrowing cost perspectives, further improvements are envisaged, the report indicates.
At the current rate of improvement and factoring in seasonal effects, the market is set to show average nominal growth of around 6% in 2010, and 1.2% in real terms.
The outlook over the next year or so, however, remains clouded by external growth concerns.
Homeowners' own assessment of potential rental income is improving relative to actual rental inflation, providing tentative signs that
confidence in the property market is slowly returning, according to Van Dyk.
While several headwinds to growth remain, such as weak employment market conditions, slowing economic growth and rising administered prices, confidence in the property market is returning.
Standard Bank expects the second half of the year to yield higher growth in the median price, with average nominal growth envisaged at around 6% for the year.
- I-Net Bridge
