Is the SA Property Market Slowing Down?
Category News
Everyone always wants to know whether house prices are increasing or decreasing, but different statistical reports are making it quite difficult at the moment to gauge which overall direction the South African property market is taking.
According to the FNB House Price Index, for example, the average house price showed year-on-year growth of 8% in April – which was slightly less than the 8,1% Year on Year growth recorded in March.
In addition, this index shows that real or after-inflation house price growth came in at 1,93% Year on Year in March, compared to 2,3% Year on Year in February, with the decline being mostly due to an increase in inflation.
But the ABSA House Price Index revealed a different pattern, with nominal Year on Year growth in respect of middle-segment small, medium-sized and large homes rising in April to 10%, 7,8% and 8,9% respectively – compared to 8,1%, 7% and 8,8% in March.
In real terms, this index also shows year on year growth in March of 2%, 0,9% and 2,6% in the prices of small, medium-sized and large homes, compared to -0,1% 0% and 2,7% in February – meaning large houses were the only ones to lose ground that month.
However, their forecasts are actually not so different.
FNB anticipates that while price growth will continue, it will do so at a slower pace as 2014 progresses, while ABSA says negative trends in and prospects for the economy, household sector finances and consumer confidence are all expected to be reflected in the performance of the residential property market, and that only single-digit nominal house price growth is forecast for 2014.
The bottom line is that while there is still high demand, and the banks are still more willing to lend, times are tough and it is getting harder for prospective buyers to meet their criteria with regard to deposits and disposable income levels, so they will continue to be very value conscious.
And what this means for homeowners and investors is that while the value of their properties will grow, big gains are not on the cards this year, so if they want to sell, they need to price very carefully.
Author: Barry Davies