October house price growth up 10.2%

House price inflation rose 10.2% year-on-year in October from September’s 5.7% y/y growth, the Standard Bank’s residential property gauge showed today.

House price growth according to the Standard Bank barometer was at an average 9.8% y/y in 2006, down markedly from the 24.6% recorded in 2005 and 31.9% in 2004.

The analysts point out that while high interest rates have a negative effect on demand, the pick up in October is not at odds with the resilient underlying macro-economic conditions, which they see providing evidence for a soft landing in the market.

"Important macro-economic support remains for consumer spending and for the residential property market. We maintain our view of a soft landing in the residential property market, with an expectation for growth in the 5% to 10% range until the second half of 2008," explain the Standards Bank analysts.

Thereafter they say they anticipate an improvement in house price inflation on the basis of their forecast for monetary policy easing, which they expect could commence during the second half of 2008.

The underlying momentum in residential property prices, as measured by the five-month moving average growth rate, was recorded at 10.1% y/y in October.

The median house price was recorded at 595,000 rand.

Article by: Evan Pickworth - www.sundaytimes.co.za