House prices continued to increase in the second quarter of 2012, according to the FNB second quarter house price review released on Tuesday.
Year-on-year house price growth rose from 7.7 percent in the first quarter of the year to 8.6 percent in the second.
However, John Loos, property strategist at FNB said affordability was still a big issue in property market.
Amid slow wage growth and no sign of interest rate reduction, housing affordability had significantly slowed since 2009.
He said there was a major improvement in home affordability for the average income earner from the second quarter of 2008 until the end of 2010.
This was a result of the combination of average wage growth outstripping growth in house prices, and an interest rate drop over the period.
"However, the most recent data point, the fourth quarter of 2011, showed both measures of affordability having improved only marginally on the fourth quarter of 2010, with most of the affordability improvement happening in 2009 and 2010," said Loos.
The average remuneration inflation as at the end of 2011 was down to six percent year-on-year, significantly slower than 2009 and 2010, when it reached 15 percent at certain stages.
Loos said consumers were under financial pressure and were looking for value for money.
"We believe that this value for money search has caused a better price growth performance in the full title segment in recent years."
By comparison, the sectional title segment showed average year-on-year price growth of 5.1 percent in the second quarter.
Sectional title refers to separate ownership of units or sections within a complex or development.
Full title segment is where the consumer buys the ownership rights of the property and the land on which it is built.
Loos said the superior performance of the affordable housing segment could be starting to lose its steam.
Article continues on page two...