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House Prices to Remain Weak| News by Staff Reporter
Prospects for the South African housing market remain dim over the next few years
The SA property market is expected to remain weak for the next few years as consumers struggle to take on new debt, according to economist and property valuer Erwin Rode.
He was speaking at the Rode Property Conference in Johannesburg earlier this week.
Rode said prospects for the housing market in the years to come remain dismal as consumers’ disposable incomes are expected to remain under pressure, putting them in no position to take on additional debt.
He forecast a further decline in real house prices of between 10% to 15% over the next five years, while in nominal terms over the same period he predicted growth of 2% a year, assuming inflation of 5%.
The average house price in July 2011 fell 3,4% (from R850,763 to R821,579) compared with July the previous year, according to the ooba house price index.
The Lightstone house price index, however, which compares the price of an existing property with the price paid for it in the previous sale, has recorded significant growth in house prices for owners who have occupied their premises for more than 15 years.
Owners of houses worth less than R250,000 (excluding townships) have over the past 15 years seen growth of 495% on their properties, Lightstone’s executive director Andrew Watt said at the conference.
These same properties have shown growth of just 105% over the past five years – a weak figure in comparison.
The Lightstone house price index showed a trend for the difference in house price growth over the last 15 years compared to growth over the last five years to weaken ever further as the price range rose.
Houses in the mid-value segment, which range in price from R250,000 to R750,000, grew in price 342% over the last 15 years compared to growth of 32% over the last five years.
Properties in the high-value segment (R750,000 to R1,5-million) grew 346% over 15 years compared to a low 19 percent over the last five years, and houses in the luxury segment (R1,5-million and up) grew 392 over 15 years compared to 23% over the last five years.