Tough times impact house price increases | Fin24
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Tough times impact house price increases

Aug 17 2015 21:15

Cape Town – Upper income metro suburbs will soon “underperform” the more affordable areas, according to the latest FNB House Price Indices by Area Value Band released on Monday.

"Tougher economic times, rising interest rates and weaker household confidence are expected to lead to a more conservative financial approach by the household sector," explained John Loos, household and property sector strategist at FNB Home Loans.

"The natural result should be a more conservative buying pattern when it comes to residential property, and this should have more of a dampening impact on the more luxurious end of the residential market."
This is expected to lead to slower house price inflation in general.

READ: Property ownership hinges on savings

Simultaneously, the rising trend in the percentage of sellers selling in order to downscale due to “life stage” continues. This appears to be the biggest reason for selling property, and has reached an estimated 30% of total sellers by the second quarter of 2015, according to the FNB Estate Agent Survey.

On a year-on-year basis, the upper income area segment’s average house price growth has slowed from 10.2% in the third quarter of 2014 to 8.4% by the second quarter of 2015.

The middle income segment recorded 8.6% price inflation, the lower middle income area segment inflated by 5.9% year-on-year and the low income area segment by 6.4%.

On a quarter-on-quarter basis the price growth slowing of the upper income areas has been just as noticeable - from 2.7% in the third quarter of 2014 to 1.6% in the second quarter of 2015.

By comparison, the other three segments’ broad house price growth slowdowns appeared to have stalled in the second quarter, with the lower income and lower middle income quarter-on-quarter growth moving more or less sideways, while the middle income segment’s accelerated slightly.

ALSO READ: Value gain through property investment

fnb  |  john loos  |  property


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