Year-on-year (y/y) changes in nominal house prices in the South African housing market appeared to be stabilising after a period of some price declines‚ with the June y/y change in the medium-sized (141 square meters to 220 square meters) house segment steady at 1.1 percent y/y in both June and May‚ Absa [ASA] said on Monday.
“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‚” Absa property analyst Jacques du Toit said.
“House price growth is expected to remain relatively low over the short to medium term‚ set to be affected by economic developments affecting household finances‚ consumers’ risk profile‚ levels of confidence and housing demand and supply. These factors are expected to be reflected in property buying patterns‚ the demand for and the affordability and accessibility of mortgage finance‚” 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‚ affecting 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 above-mentioned trends in nominal price growth as well as a lower headline consumer price inflation rate‚ which‚ at 5.7 percent y/y in May‚ is again back within the inflation target range of 3 percent-6 percent‚ after reaching a level of 6.3 percent y/y in January this year‚” he said.