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Absa house growth price up 2.9%

Category Market

The year-on-year price growth with regard to homes in the middle segment of the South African residential property market slowed markedly to 2.9% in September 2010 from the revised 5.4% (7.1) in the August, Absa house price index showed on Thursday. This brings the September index to 381.7 from 366.6 a year earlier. On a month-on-month basis, the average nominal value of a home in the middle segment of the market has been declining since May this year, bringing the average price to R1.012 million rand in September – down by R42,700, or a cumulative 4%, after peaking at R1,054 million in April. Absa property analyst Jacques du Toit attributed the current downward trend in y/y house to base effects, as a marked recovery in price growth occurred in the second half of 2009. However, the m/m declines evident in average house prices over the past few months are to do with lower real GDP growth in the second quarter of 2010, tight employment conditions in the first six months of the year and trends in consumer finances, Du Toit noted. In the category of small houses, the average nominal value was up by18.6% y/y in September, down from a revised y/y growth rate of 21.1% inAugust. The average value of a small home came to about R779,200 in nominal terms in September. The real value of a house in this segment was up by 17% y/y in August after rising by 18.6% y/y in July. The average nominal value of medium-sized houses increased by 4.1% y/y in September - a revised growth rate of 5% y/y was registered in August this year - which brought the price in this category to around R953,600. Real price growth of 1.4% y/y was recorded in August, down from 1.9% y/y in July. In respect of large houses, the average nominal value increased by only 0.4% y/y in September – 1.5% y/y recorded in August after revision. The value of a large house came to R1,411 million in nominal terms inSeptember. In real terms the average value of a home in the large segment was down by 1.9% y/y in August, after declining by 0.8% y/y in July this year. In the first nine months of 2010 the average nominal value of middle-segment homes increased by an average of 9.1% y/y, with real price growth averaging 4.9% y/y in the period January to August. Real price growth recorded over this period is based on an average headline consumer price inflation rate of 4.7% y/y in the first eight months of the year. Absa, South Africa's largest mortgage lender, anticipates nominal y/y price growth of about 7% for the full year. - I-NetBridge

Author: I-Net Bridge

Submitted 28 Oct 10 / Views 4726