A quick turnaround in the housing market was ”improbable”, Standard Bank said on Thursday as it released its latest Residential Property Gauge.
”Standard Bank’s property book for the first nine months of 2009 revealed an average monthly decline of 4,2% in the median house price.
”This brings the number of monthly declines to 16 consecutive months,” it said in a statement.
The September smoothed (random fluctuations removed) data yielded a rate of contraction of 5,2% year-on-year, the same decline as in August.
In real terms (inflation factored in), using its estimate of the CPI in September to deflate nominal house prices (inflation not accounted for), the decline in real house prices came to approximately 11,5%, Standard Bank said.
The smoothed growth rate for September showed that the value of the median residential properties financed by Standard Bank was R550 000.
Looking ahead, Standard Bank said important drivers of overall growth in the economy, such as the level of household income and debt, as well as the medium-term economic and financial outlook, were such that a quick turnaround in the housing market was improbable.
”The most that we can hope for is for price declines to stabilise towards the end of the year as the recent interest rate cuts work their way through the economy and consumer and business sentiment improve.”
It said a mix of factors such as negative income growth and concerns about job security would without doubt weigh on the property market.
”Furthermore, in the short-term, any easing in credit granting criteria will be mild, as upside risks regarding uncertainty in job security and income growth continue,” Standard Bank said.
In due course, though, taking into account the accumulated impact of declining interest rates and lower inflation, house prices would be stimulated, it said. This was expected only in early 2010. — Sapa