07 Nov.
House price growth appears to be peaking.
Latest trends.
According to Absa’s calculations, the nominal value of homes in the medium-sized (building area of 141m²-200m²) and large (building area of 221m²-400m²) categories of the South African housing market improved further in October 2011 compared with a year ago. House prices in the small segment (building area of 80m²-140m²) continued to contract on a year-on-year basis, mainly as a result of base effects.
However, year-on-year price changes appear to be peaking in all three the abovementioned categories of housing, which are related to slowing or declining price trends on a monthly basis since earlier this year.
In real terms, i.e. after adjustment for the effect of inflation, annual price deflation continued across all three segments of housing up to September 2011, impacted by rising headline consumer price inflation, which reached a level of 5,7% year-on-year (y/y) in September. The average real price (at constant 2008 prices) of houses in the middle-segment of the market (see explanatory notes) was in September this year about 13% below its peak of mid-2007. This was the result of average nominal house price growth being below the average headline consumer price inflation rate during this period.
Average nominal house prices in the various segments were as follows in October 2011, with nominal and real price changes presented in the table on the next page:
- Small homes (80m²-141m²): R734 800
- Medium-sized homes (141m²-220m²): R1 009 500
- Large homes (221m²-400m²): R1 475 800 …
Read more at Absa Property Research
Discussion
Comments are closed.