Related Articles
Top Stories
May 27 2012 11:21
There's a price war raging between South Africa's cellphone networks after Cell C lowered the rates of its prepaid calls by more than 34%.
May 28 2012 07:53
The City of Cape Town has spent R175m running the Myciti bus service since the Soccer World Cup compared to an income of R35m, a report says.
May 27 2012 13:09
The oversupply of golf estates has claimed another victim.
Johannesburg - The residential property market may have entered 2009 battered and bruised, but SA house prices are not expected to fall anywhere near the extent of those of the UK and US.
The slew of housing data released this week by banks and mortgage originators show that the average brick and mortar abode in SA is now worth roughly 3% less than it was a year ago.
That's in stark contrast to the house price falls of 16.6% and 18.2% recorded over the past year in the UK and US respectively.
Although the four house price indices most widely used in SA all reflect different degrees of house price deflation, negative growth for January (year-on-year) has been contained in a fairly narrow band of between 0% (Absa) and -4.8% (ooba).
Standard Bank's house price index decreased by 3.6% in January, while First National Bank's index dropped by 4% over the same time.
The discrepancy between the various indices can be ascribed to the fact that each is based solely on the housing transactions financed by their own mortgage books. Different methodologies are also used to calculate prices. For instance, Standard Bank uses median prices while Absa uses average prices.
Although property analysts and economists don't expect any real recovery in housing activity in 2009 - despite lower interest rates - they don?t expect prices to drop much further from current levels.
Absa senior property analyst Jacques du Toit expects the market to bottom by mid-2009, with house prices dipping by no more than 2.5% in 2009, according to Absa figures. The latter has the biggest slice of the SA mortgage lending industry.
An FNB property strategist is a tad more bearish, forecasting an overall drop of about 5% for 2009, with house prices likely to return to positive growth territory by 2010.
This suggests that SA's housing slump will be far less pronounced than that of the US and UK, where house prices are expected to remain in the doldrums this year. British mortgage lender Nationwide Building Society reported last week that UK house prices were down 16.6% in January (year-on-year).
A report by UK property group Knight Frank shows that the prices of prime property in central London have fallen 21.4% between March 2008 and January 2009. The sector priced between £1m (R14m) and £2.5m (R35m) crashed 25.3% over the same period. Knight Frank last week increased its house-price deflation forecast for central London from 30% to 35% from peak to trough.
Latest data from Standard & Poor's show that US house prices were down 18.2% in November (year-on-year). Some cities, including Las Vegas, Phoenix and San Francisco, have seen house prices plummet by more than 30% over the same period.
- Fin24.com