House price growth even more sluggish

2012-09-03 11:45

Johannesburg - The FNB House Price Index showed a further slowing in its year-on-year (y/y) growth rate in August, from a revised 7.8% rate in July to 6.6% in August, the financial services group said on Monday.

"The further slowing in the year-on-year growth rate is more or less in line with our expectations, as we have seen increasing evidence of a 'soft patch' in both the global and domestic economy as the year has progressed," the group said in a statement.

In real terms, adjusted for consumer price inflation, as at July the index showed a slight y/y growth, slowing from 2.85% in the previous month to 2.76%.

The slowing in real house price growth was limited by a significant further decline in consumer price inflation from June's 5.5%, to 4.9% in July.

The index's average price of homes transacted was R865 900.

This meant that since the boom period real house price peak reached in February 2008, real house prices (house prices adjusted for CPI inflation over the period) were 13.6% lower at July 2012.

In nominal terms, prices were 14.2% higher than February 2008, as at August 2012.

However, compared to price levels at the inception of the FNB House Price Index in July 2000, real prices were still 68.4% higher as at July 2012, while nominal price levels were 230.9% higher in August 2012.

FNB said its valuers perceptions of market strength, as encapsulated in the FNB Valuers Market Strength Index, were increasingly supportive of the slowing price growth trend as measured by the FNB House Price Index.

In August, the FNB Valuers Market Strength Index rose slightly further, from a previous level of 45.64, to 45.73, indicating that the valuers as a group still perceived a slight narrowing of the gap between supply and demand.

"This slowing growth comes as little surprise given signs of global and domestic economic weakness that have been building for some time," FNB said.

The group anticipated further slowing in the y/y rate of increase in house prices, with the FNB House Price Index expected to end the year on lower y/y growth of between 3% and 5%.

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  • Megala - 2012-09-03 16:18

    And yet slimey estate agents are saying buy, buy, buy! dont buy now as its gonna be cheaper next year!

  • Nathan - 2012-09-03 19:38

    Dont buy a damn thing... pay your current debt off asap while rates are so nice and low... leave the car, leave the furniture.. just pay everything off...

  • jeremy.forbes.1293 - 2012-09-03 20:20

    There is a very large corrective in prices on its way to SA, it has had the largest price bubble than any other English speaking economy. In the US the price corrective is above 50% which means in nice parts of Florida you can now buy a spacious three/four bed house with pool for under R600 000. In Ireland, for the same amount of money you can get the same size house, newly built. In Spain they are selling two for the price of one. The SA bubble has been larger than all these countries,the price corrective will be sharper. If you have to buy, offer at least 30% under the asking price. If not you will be ruined. The price of houses have far exceeded growth in income, that is why prices will come down.

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