House price growth stabilising.
According to the Absa house price indices, which are based on the average value of homes for which the bank received and approved applications for mortgage finance in the small, medium-sized and large categories in the middle segment of the market (see explanatory notes), year-on-year price growth in the South African housing market appears to be stabilising after a period of some price declines.
The segments of medium-sized and large housing showed some stable nominal year-on-year price growth in May and June this year, although remaining at a relatively low level. The small segment was still locked in price deflation up to June, but the pace of deflation continues to slow down. On a month-on-month basis prices have been on a gradual upward trend in the small and medium-sized segments over the past four to five months, impacting year-on-year price growth. In the category for large housing only some marginal price deflation still occurred in June compared with May.
In real terms, however, house price deflation continued up to May this year, but the momentum is slowing down against the background of the abovementioned trends in nominal price growth as well as a lower headline consumer price inflation rate, which, at 5,7% year-onyear (y/y) in May, is again back within the inflation target range of 3% to 6%, after reaching a level of 6,3% y/y in January this year.
The average nominal value of homes in each of the three middle-segment categories was as follows in June 2012, with nominal and real price changes presented in the table and graphs below:
Small homes (80m²-141m²): R684 600
Medium-sized homes (141m²-220 m²): R1 003 900
Large homes (221m²-400m²): R1 475 200 …
Read more at Absa Property Research