Growth in house prices in the middle segment of the market slowed to a nominal 9,1% in January 2008 — the lowest price growth since December 1999, when it was 9,3%, Absa said on Wednesday.
Nominal price growth of 10,6% year-on-year was recorded in December last year.
These trends in house-price growth are according to the latest Absa house-price index, which indicates that the average price of a house was about R962 000 in January.
”Real year-on-year price growth was only 1,5% in December 2007 (3,4% in November). This was the lowest real growth since the 1,4% recorded in September 1999,” Absa said.
In 2007, real growth in house prices averaged 6,9% (10,2% in 2006), based on an annual average headline consumer price inflation rate of 7,1% (4,7% in 2006).
On a month-on-month basis, nominal house-price growth of just 0,1% was recorded in January from 0,2% in December.
In real terms, house prices declined by 0,7% in December from November, which was the fourth consecutive month of real decline on a monthly basis.
”The slowdown in house-price growth has accelerated since September 2007, mainly driven by deteriorating market conditions on the back of further interest-rate hikes in the second half of last year, significantly slower growth in real household disposable income in the first three quarters of the year compared with 2006, and the full implementation of the National Credit Act in mid-2007,” Absa said.
In view of these developments, Absa said house-price growth may slow down further this year from current levels. — Sapa