House price growth shows consumer strain | Fin24
 
  • Renewables

    The govt is assessing a R160bn plan to establish the world’s largest green-energy financing initiative.

  • Biggest Jump

    Oil prices have spiked after drone attacks in Saudi Arabia disrupted global supply.

  • Fin24’s newsletter

    Sign up to receive Fin24's top news in your inbox every morning.

Loading...

House price growth shows consumer strain

Sep 08 2015 15:26

Johannesburg - The declining trend in year-on-year (y/y) growth in the average nominal value of homes in the various categories of middle-segment housing in South Africa continued in August, according to the latest Absa House Price Index.

Average month-on-month price growth has slowed down further to below 0.2% in August – its lowest level since early 2012 and contributing to the downward trend in year-on-year price growth.

Real house price growth - that is after adjustment for the effect of consumer price inflation - also slowed down up to July as a result of declining nominal price growth and steadily rising consumer price inflation in recent months.

Some real y/y price deflation was evident in all categories of middle-segment housing in July. The average level of house prices was in July almost 12% lower in real terms compared with the peak in August 2007.

In August the average nominal value of small homes (80m²-140m²) was R869 000, that of medium-sized homes (141m²-220 m²) was R1 206 000 and that of large homes (221m²-400m²) was R1 917 000.

READ: Significant growth in township house prices

"Average house price growth has been on a continued downward trend since late 2014, driven by increasingly challenging economic conditions as reflected by economic and employment growth, inflation and interest rate trends and developments regarding the state of household finances, consumer credit-risk profiles and consumer confidence," said Jacques du Toit, property analyst at Absa Home Loans.

Du Toit said consumers are expected to face increased financial strain towards year-end and in 2016 as a result of inflationary pressures and rising interest rates.

"Banks’ risk appetite and lending criteria will reflect these conditions, affecting the demand for and affordability of housing and mortgage finance, which will be evident in the performance of the property market."

He said nominal house price growth is forecast to remain in single digits to average around 6% in 2015, with the risk for price growth to the downside into next year.

ALSO READ: Cape Town house prices still top performers

(Source: Absa)

absa  |  house prices  |  property
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
3 comments
Comments have been closed for this article.
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

What's your view on deep sea mining?

Previous results · Suggest a vote

Loading...