08 Sep.
Latest trends in house prices appear to be unsynchronised.
Based on the latest trends in the Absa house price indices for small, medium-sized and large homes, i.e. the middle segment of the South African housing market, for which the bank approved mortgage finance (see explanatory notes), house price growth appeared to be unsynchronised between the abovementioned three categories of housing up to August 2011. These mixed signals regarding house price trends are evident from recent year-onyear as well as month-on-month price growth.
Nominal house price growth improved further on an annual basis in the medium-sized segment in August this year, while price deflation continued to slow down in the small segment. However, in the category of large houses, prices were deflating in July and August, although only marginally. On a monthly basis price growth remained subdued in the small and medium-sized segments, with prices of large houses declining month-on-month.
In real terms, i.e. after adjustment for inflation, prices in all three categories of housing continued to decline on a year-on-year basis in August this year. Real house price calculations are based on the headline consumer price inflation rate, which was 5,3% yearon- year (y/y) in July 2011, up from 5% y/y in June this year.
The average nominal price of homes in the various categories was as follows in August 2011, with nominal and real price growth presented in the table on the next page:
- Small homes (80m²-141m²): R770 200
- Medium-sized homes (141m²-220m²): R1 009 000
- Large homes (221m²-400m²): R1 440 700
The latest trends in house prices, rising by about 1% y/y on average in nominal terms in the first eight months of 2011, are indicative of conditions in the local residential property market against the background of developments on the front of the macro economy and the household sector. …
Read more at Absa Property Research
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