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Johannesburg - The property market recovered further in September when a growth rate in the median property price of 8.3% year-on-year (y/y) was reported, Standard Bank said on Friday.
This followed on a growth rate of 8.1% y/y in August, economist Johan Botha said as the bank released its latest residential property report.
"In real terms, the median price jumped by 4.8% year-on-year in September."
The median house price increased by 0.6% month-on-month (m/m) in August, below the average monthly increase of 1.1% recorded since the start of the year.
The September m/m growth momentum turned negative when growth of -2.5% was reported.
"Consequently, the median house price decreased to R586 000 in September from R600 800 in August," Botha said.
This suggested a "loss in momentum" over the medium term as the property market digested the impact of weaker expected growth, fragile employment market conditions and other uncertainties.
Some positives, however, were present, Botha said.
"Interest rates are at 30-year lows, inflation is well below the midpoint of the target range and low inflation rates are putting money back in the pockets of consumers."
Debt servicing costs had shown a steady decline and were now 8.0% of disposable income.
Net household wealth, after declining sharply from mid-2007 onwards on the back of tumbling house prices and a steep fall in most classes of equity, had bounced back to growth rates similar to pre-crisis levels.
Botha said real consumer spending had increased by a sturdy 4.8% in the second quarter of 2010, following on growth of 5.7% in the first quarter.
"Interest rate sensitive sectors, such as durable and semi-durable spending, led the growth reported for spending in the quarter."
At the expected rate of improvement and factoring in seasonal effects, the market was set to show average nominal growth of between 4.0% and 5.0% this year, and 1.2% in real terms.
"The outlook over the next year or so, however, remains clouded... a below-trend growth rate in economic activity suggests that new avenues for property growth via increased employment or speculative buying will be limited."
This followed on a growth rate of 8.1% y/y in August, economist Johan Botha said as the bank released its latest residential property report.
"In real terms, the median price jumped by 4.8% year-on-year in September."
The median house price increased by 0.6% month-on-month (m/m) in August, below the average monthly increase of 1.1% recorded since the start of the year.
The September m/m growth momentum turned negative when growth of -2.5% was reported.
"Consequently, the median house price decreased to R586 000 in September from R600 800 in August," Botha said.
This suggested a "loss in momentum" over the medium term as the property market digested the impact of weaker expected growth, fragile employment market conditions and other uncertainties.
Some positives, however, were present, Botha said.
"Interest rates are at 30-year lows, inflation is well below the midpoint of the target range and low inflation rates are putting money back in the pockets of consumers."
Debt servicing costs had shown a steady decline and were now 8.0% of disposable income.
Net household wealth, after declining sharply from mid-2007 onwards on the back of tumbling house prices and a steep fall in most classes of equity, had bounced back to growth rates similar to pre-crisis levels.
Botha said real consumer spending had increased by a sturdy 4.8% in the second quarter of 2010, following on growth of 5.7% in the first quarter.
"Interest rate sensitive sectors, such as durable and semi-durable spending, led the growth reported for spending in the quarter."
At the expected rate of improvement and factoring in seasonal effects, the market was set to show average nominal growth of between 4.0% and 5.0% this year, and 1.2% in real terms.
"The outlook over the next year or so, however, remains clouded... a below-trend growth rate in economic activity suggests that new avenues for property growth via increased employment or speculative buying will be limited."
