Middle-segment house price growth lowest in 4 years | Fin24

Middle-segment house price growth lowest in 4 years

Sep 09 2016 18:47
Carin Smith

Cape Town - The average nominal value of middle-segment homes in South Africa slowed down further in August to its lowest level in almost four years, Jacques du Toit, property analyst of Absa Home Loans, said on Friday.

In August, nominal price growth of 3.8% year-on-year (y/y) was recorded in middle-segment housing, with real price deflation of 1.7% y/y registered in July. Du Toit said monthly nominal price growth has been on a declining trend during the course of the year.

In real terms - therefore, after adjustment for the effect of consumer price inflation - house prices contracted on a year-on-year and month-on-month basis in the first seven months of the year.

READ: Buyers 'deliberately' more conservative in property market

According to the Absa house price indices, in August the average nominal value of homes in the middle-segment categories was R939 000 for small homes (80m²-140m²); R1 312 000 for medium-sized homes (141m²-220 m²) and R1 973 000 for large homes (221m²-400m²).

Du Toit pointed out that, despite the SA economy having grown by 3.3% at a seasonally adjusted annualised rate in the second quarter of 2016, the economy is forecast to show very little, if any, growth for the full year.

"Consumers’ financial vulnerability and credit health deteriorated further in the second quarter of the year, with consumer confidence, already at a low level, that may continue to decline," said Du Toit.

"Against the background of macroeconomic and household sector-related trends and prospects, nominal house price growth is forecast to remain under downward pressure in the rest of the year and into 2017, with prices expected to drop further in real terms over the next twelve months."

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