The year-on-year growth in house prices started sluggishly in 2011, according to the Absa House Price Index released on Monday.
“The year-on-year growth in the average nominal value of homes in the three categories of the middle-segment of the housing market for which Absa approved mortgage finance, started the year at a low,” said Jacques du Toit, sectoral analyst at Absa Retail Bank, in a statement.
In real terms, taking the effects of inflation into account, year-on-year price growth in the medium and large house segments turned negative towards the end of 2010.
No real price growth was recorded in the small house (80m²-141m²) segment.
The nominal values, where the effects of inflation are not taken into account, of small houses dropped 0,5% year-on-year in January 2011. This brought the average price of a small house to about R722Â 900.
No real year-on-year price growth in this category occurred in December.
Du Toit said the average value of medium-sized houses (141m²-220m²) increased by 1% year-on-year in January. The average price in this category was about R966 500 in January. A real price decline of 1,3% year-on-year was recorded in December.
Nominal year-on-year price growth in the large houses (221m²-400m²) segment stayed constant at 1,6% year-on-year towards the end of 2010 and into January.
The average price of a large house was R1Â 456Â 700 in January.
In real terms the average price in this segment was down by 1,8% year-on-year in December.
Du Toit said a growing economy and low interest rates, accompanied by some increase in employment and household disposable income growth, could support the residential property market in 2011.
However, in real terms, house prices could decline in 2011, he said. They rose by just under 3% in 2010. — Sapa