South African average house prices fell for the first time in eight years, pushing the March year-on-year (y/y) inflation to a negative 5,2%, new data showed on Tuesday.
The negative growth recorded for the month follows three straight months of flat growth and pushed the average house price to R550 000 from R570 000 last month, the Standard Bank Residential Property gauge showed.
The five-month moving average growth rate slowed to 0,2% y/y in March from 3,25% y/y in February, mirroring waning consumer demand amid a higher interest-rate environment.
“It should be reiterated that the median house-price index is a gauge of trends in house-price growth at an aggregate level. It may therefore hide pockets of strength in certain areas that could still be witnessing house-price growth,” said Standard Bank economist Sizwe Nxedlana.
He added that a desegregation of the Standard Bank homeloans book once again showed that the lower quartile house price declined in March 2008 compared with March 2007.
“The lower quartile house price, which is the price below which 25% of the sample data lie, was recorded at R295 000 in March 2008 compared with R350 000 in March 2007. The upper quartile house price, which is the price below which 75% of the sample data lie, was recorded at R950 000 in March 2008 compared with R900 000 during the same month last year,” he said.
He added that these trends might be signalling an out-performance of the middle and upper-middle price bands relative to the lower end of the market.
“They could also be a reflection of an inward shift of the underlying house-price distribution, implying tentative evidence that the market is shifting downward or becoming more affordable. This suggests the reappearance of value in the middle and upper-middle segments of the market,” said Nxedlana.
Looking ahead, Nxedlana said an analysis of South Africa’s macroeconomic prospects suggested that, at least in the short term, the continuation of lower house-price growth was the most likely path to further improvements in housing affordability and that house prices would continue to show weak growth. — I-Net Bridge