Home values in a state of deflation.
The average value of homes in the South African residential property market for which Absa received and approved applications for mortgage finance, is deflating. This is based on the bank’s house price indices for the small, medium-sized and large categories in the middle segment of the market (see explanatory notes).
Nominal year-on-year price deflation was recorded in all three the abovementioned segments of the housing market in March 2012, with values starting to decline on a monthly basis at various stages during the course of last year. In real terms, i.e. after adjustment for the effect of inflation, home values continued to deflate up to February this year, based on headline consumer price inflation of 6,1% year-onyear (y/y) in the month.
Average nominal price levels of houses in the various categories of the middle segment of the market were as follows in March 2012, with nominal and real price changes presented in the table and graph on the next page:
- Small homes (80m²-141m²): R620 700
- Medium-sized homes (141m²-220 m²): R961 600
- Large homes (221m²-400m²): R1 476 000
The latest trends in house prices are believed to be a reflection of macroeconomic developments and property-related factors such as running costs, impacting household finances. These factors may affect the demand for housing and cause changes in property buying trends, which will impact market activity, price trends in the various segments of the market, and the demand for mortgage finance. …
Read more at Absa Property Research