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House Price Growth Stymied
| News by Staff ReporterAccording to the latest FNB House Price Index
The latest First National Bank (FNB) House Price Index has shown that the year-on-year growth rate in September has stalled at 5,6%.This is according to FNB economist John Loos, who said, “The latest results imply that, since the beginning of the big market 'correction', which we believe began after a real house price boom time peak in February 2008, house prices in real terms have declined cumulatively by minus 15,3% to August 2011.”
He added, however, that prices were still up 64,7% in real terms and 313,1% in nominal terms since the index started in July 2000.
Loos said it was believed that economic factors were beginning to play a role in constraining house price growth, with the stimulus from the late-2010 interest rate cuts wearing thin and a slowdown in economic growth in the second quarter of 2011 adding pressure on real household disposable income growth.
“In real terms, adjusting house price growth for consumer price inflation, August saw a very slight +0,3% positive year-on-year growth rate after 9 consecutive months of year-on-year decline, with year-on-year house price inflation outstripping consumer price inflation,” according to John Loos.
On a month-on-month basis, house prices show further loss in momentum in September, with growth turning negative to the tune of –0,24%, down from a revised +0,19% in August.
“This is the continuation of a weakening month-on-month growth trend spanning back to the +1,34% peak of February 2011.”
Loos added that looking forward to the remainder of this year, “there are no obvious major economic stimuli for a still poorly balanced (weak demand vs supply) South African residential property market, with interest rates still on hold for now, and global and domestic economic growth currently slowing.”
Source: www.bizpremises.co.za
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