House price growth will continue to slow this year as the local and global economies weaken and the Reserve Bank gives no indication it will lower interest rates, figures released yesterday show.
House price statistics from two of SA’s biggest mortgage lenders, First National Bank (FNB) and Absa, suggest that prices will remain relatively low in the short to medium term as the economy is expected to grow at only 2,6%, after growing 3,1% last year.
Slowing growth affects household finances, consumers’ risk profiles, levels of confidence and housing demand and supply.
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According to FNB, the balance between demand and supply in the residential market deteriorated from the first quarter to the second, driven by demand slowing and the availability of stock.
FNB property market analyst Ewald Kellerman said yesterday that in the second quarter, the average time it took to sell a property rose to 17 weeks and four days, from the previous quarter’s 15 weeks and six days. "This is a disappointing development, and although winter seasonality plays a role, the reality is that we have made only marginal progress in improving the market balance since 2009," Mr Kellerman said.
A house sold after eight weeks, as was the case in 2008, was the benchmark of a "healthy" market.
But Absa’s house price index - which accounts for a third of mortgage bond finance - showed that year-on-year price growth in the housing market appeared to be stabilising.
Absa property analyst Jacques du Toit said in the medium-sized and large housing market there was some stable, nominal year-on-year price growth in May and last month. "The small segment was still locked in price deflation up to June, but the pace of deflation continues to slow down," he said.
"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 occurred in June compared with May."
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