House prices ac­cel­er­at­ing but mar­ket weak – FNB

3.6% in­crease year-on-year

The Star Early Edition - - BUSINESS NEWS - Roy Cokayne

THE RATE OF in­crease in house prices has been ac­cel­er­at­ing year-on-year for the past six con­sec­u­tive months, ac­cord­ing to FNB.

How­ever, the hous­ing mar­ket re­mained weak, said FNB house­hold and prop­erty sec­tor strate­gist John Loos.

FNB’s house price in­dex re­leased this week re­vealed that house prices in­creased by 3.6 per­cent year-on-year last month from 3.3 per­cent in May.

Loos said there had been a mild ac­cel­er­a­tion in the rate of in­crease in house prices since the re­vised low of 1.7 per­cent year-on-year in De­cem­ber.

Af­ter ad­just­ment to take into ac­count the im­pact of in­fla­tion, real house prices de­clined by 2 per­cent in May this year com­pared to the re­vised 2.1 per­cent re­duc­tion in April.

Loos added that house price growth on a month-on-month ba­sis slowed again last month for the third con­sec­u­tive month.

He said this pointed in­creas­ingly to a re­newed “soft patch” emerg­ing, not only in the hous­ing mar­ket but also in the econ­omy, af­ter there were signs in the first quar­ter of this year that a slightly stronger econ­omy may be ap­proach­ing.

FNB said the av­er­age price of homes trans­acted last month was R1 102 190.

Stan­dard Bank, which claims to be the big­gest home loan provider in the coun­try, last week launched a monthly pro­vin­cial house price in­dex and quar­terly re­gional house price in­dex.

Me­dian prices

The bank said th­ese in­dices, which mea­sured the change in me­dian prices of prop­er­ties sold, would pro­vide key in­sights into re­gional and pro­vin­cial mar­ket trends across the coun­try.

It said the ad­van­tage of a me­dian was that it is not un­duly in­flu­enced by ex­treme val­ues and out­liers.

Siphamandla Mkhwanazi, a Stan­dard Bank con­sumer economist, said their re­search for May this year showed that a price re­cov­ery in Gauteng in the first few months of the year was driven by a ro­bust per­for­mance in Tsh­wane, where first-time buyer de­mand was par­tic­u­larly strong.

The pro­vin­cial house price in­dex also re­vealed that the West­ern Cape was cur­rently at­tract­ing “af­flu­ent” buy­ers, be­cause of the higher pro­por­tion of cash trans­ac­tions, but the growth mo­men­tum had di­min­ished in re­cent months as mid­dle in­come buy­ers were be­ing priced out of the mar­ket.

Mkhwanazi said they es­ti­mated that cash trans­ac­tions in the West­ern Cape had sur­passed mort­gage-backed trans­ac­tions, with 55.8 per­cent of trans­ac­tions in the prov­ince cash deals.

He said house price growth in KwaZulu-Natal had strug­gled to out­pace in­fla­tion for some time now while growth was still sub­dued in the East­ern Cape al­though it was show­ing signs of re­cov­ery.

The re­gional house price in­dex showed that me­dian prices in Jo­han­nes­burg in the first quar­ter of this year rose by 6 per­cent year-on-year and in Cape Town by 13.9 per­cent, with Tsh­wane house prices grow­ing faster than Gauteng at 8.8 per­cent.

Stan­dard Bank said the month-on-month me­dian price of a house trans­acted in Gauteng was 0.1 per­cent lower in May than in April. Mkhwanazi said this sig­nalled that the re­cov­ery in house prices in the first quar­ter may be los­ing steam as con­sumers were un­der in­creas­ing fi­nan­cial pres­sure.

A house price re­cov­ery took place in Gauteng, says a Stan­dard Bank con­sumer economist. PHOTO: SIMPHIWE MBOKAZI

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