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According to the latest Absa house price index, the average house price in the middle segment of the market increased a nominal 14,2% year on year to R950000 last month.
A fairly expensive property market caused demand to drop off, which in turn led to a gradual decline in the rate of house price growth.
Absa senior economist Jacques du Toit said yesterday the drivers of this downward trend were “tightening economic conditions, higher debt levels” and the effects of the National Credit Act.
He said that based on the first nine months of this year, the bank was forecasting nominal house price growth of 14,5% for the full year.
“We believe the Reserve Bank will leave rates unchanged. There are signs that overall demand in the economy is slowing and that growth in credit extension is also tapering off.
Property economist Francois Viruly, of Viruly Consulting, said that the residential market priced up to R700 000 was driving the residential market at the moment.
“We are going to start to see more rental increases. People are being pushed into the rental market, and the buy-to-let market is going to start performing much better in the next 12 months,” he said.
SimonsTownRealty: Sell, Buy A Simon’s Town Property? Phone Today 021-7864028 or 082 870 2004 How Do You Care For Your Second Home When You Are From Out Of Town? Ask The Local Eye To Take Care.
South African coastal property inflation rose by 12,8% year-on-year (y/y) in May this year from 11,9% in April, the Lightstone Coastal Price Index released on Friday showed.
The index includes all repeat property transactions on property within 500 metres from the coastline.
At the same time, the Non-Coastal Index inflated by 18,8% in May from 19,1% in April.
“The lower coastal belt inflation rate, compared to the non-coastal index, is seen as a reflection of the greater cyclicality of strongly holiday property-driven markets, with potential buyers more easily being able to hold back in adverse times such as an interest rate hiking period,” Lightstone said.
It said the lower rate of inflation for some time was arguably a “necessary evil”, following a boom period that eroded affordability.
“However, the narrowing of the price inflation gap between the two indices, with coastal price inflation rising, suggests that the ’shake-out’ in the coastal market may be drawing slowly to a close, although one mustn’t dismiss the possibility of further relative weakening in the figures for the second half of 2007, remembering of course the impact of both further interest rate hikes as well as the National Credit Act (NCA) implementation,” Lightstone said. – I-Net Bridge
SimonsTownRealty: Sell, Buy A Simon’s Town Property? Phone Today 021-7864028 or 082 870 2004 How Do You Care For Your Second Home When You Are From Out Of Town? Ask The Local Eye To Take Care.
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