The property cycle should recover relatively firmly in the second half of the year, Standard Bank said on Thursday as it released its latest residential property gauge.
“The recovery in Standard Bank’s median house price gained traction in June, rising to R588 500 from R579 000 in May,”
economist Danelee van Dyk said.
In absolute terms, this level corresponded to the median house price at the start of the business cycle downswing in December 2007.
June also marked the fourth-consecutive monthly increase taking the median price 2,5% above its level in June last year.
In real terms, however, the property cycle was about 2% below last year’s levels, an improvement from the turning point of -12,3% year-on-year in April last year, Van Dyk added.
Further confirmation of improving demand in the middle-to-upper price brackets was obtained in June, which along with last year’s low base, would translate into steepening growth in a few months’
time, she said.
“The lower turning point in the property price cycle occurred during August and September last year.
“This, coupled with lower envisaged inflation in the third quarter of 2010, should see real price growth at zero, if not marginally positive,” said Van Dyk.
Thursday’s data provided a generally encouraging snapshot of market conditions during the first few weeks of the World Cup.
“Even though it was speculated that the World Cup may have cannibalised demand for asset-backed finance, to some extent, the decline in the volume of applications received in June was nothing out of the ordinary.”
Van Dyk said that when compared to the typical vacation months, such as December and April, June’s volumes actually had surprised on the upside. – Sapa