According to the latest Absa house-price index, nominal house price growth of 12,8% year-on-year was recorded in April this year compared with a growth rate of 13,7% in March, Absa said in a report on Thursday.
This was the lowest year-on-year growth since January 2000 when it was 11,8% and brought the average price of a house in the middle segment of the market to about R770 000 in April. The average nominal year-on-year growth in house prices in the first four months of 2006 was 14%.
In real terms, year-on-year growth of 10% was recorded in March compared with a growth rate of 10,2% in February, based on the headline consumer price index. The average real year-on-year growth in house prices came to 10,3% in the first three months of 2006, Absa said.
On a month-on-month basis, nominal growth in house prices was down to 0,5% in April compared with a growth rate of 0,7% in March. Real month-on-month growth of only 0,2% was recorded in March this year.
Based on the current mortgage interest rate of 10,5% and the average price of a house in April this year, the monthly mortgage repayment and the gross monthly income required in order to afford a 100% mortgage were 11,1% higher in the past month compared with April 2005 when the rise was 20,1%.
“Although housing is, in general, still less affordable than a year ago according to this analysis, the rate of deterioration has decelerated significantly during the course of the past 12 months,” Absa said.
The international price of oil is currently well above $70 a barrel, while the rand is relatively strong against the major international currencies, largely driven by high precious metal prices. CPIX inflation dropped to 3,8% in March from 4,5% in February, and is forecast to remain within the inflation target range of 3% to 6% in 2006.
The South African Reserve Bank decided to keep interest rates unchanged at the April monetary policy committee meeting, but mentioned rising international oil prices and strong consumer demand as the main threats to the inflation outlook, Absa added.
The significant cut in transfer duty on property, announced in the Budget in February, did not lead to stronger growth in house prices during March and April, although volumes did appear to have increased over this period.
Average nominal house price growth of about 12% is still projected for 2006, Absa concluded. — I-Net Bridge