There will be no rapid turn-around for the housing market, Standard Bank said on Tuesday in its latest residential property report.

This was in spite of the economy emerging from recession in the third quarter of 2009 and showing above-expectations growth in the fourth quarter 2009.

Standard Bank's property book for February 2010 showed that the rate of decline in the median house price continued to slow down.

The smoothed data yielded a rate of contraction of 1.9 percent year-on-year, following a decline of 2.9 percent year-on-year in January 2010.

"Significantly, the smoothed median house prices over the last five months signified a steady, if slow, improvement in the property market," Standard Bank said.

The smoothed growth rate for February showed that the value of the median residential properties financed by Standard Bank was R550,000, marginally up from January's R545,000.

"However, in real terms, using our estimate of the consumer price index in February to deflate the nominal house price, the decline in real house prices comes to approximately 8.4 percent year-on-year from 9.3 percent year-on-year in January," Standard Bank said.

It added that the nature of the recovery in economic activity and the lack of demand in the early phases of the upswing meant that the property market could possibly be one of the last sectors to improve in 2010.

"Furthermore, households, who are still under pressure, may find the going tough for most of the year."

Standard Bank said the large electricity tariff increases, their second round effects and possible increases in other administered prices such as municipal rates and taxes were not good news for consumers already stretched to the limit.

"Also, even though we expect interest rates to remain at current levels to the end of the year, the next move in interest rates is most likely upwards."

Standard Bank added that expectations for stronger growth in the housing market could thus be misplaced.

"We expect house price growth to emerge from the red in the second quarter of the year and register a growth rate in the three to five percent range in 2010."

Article from: www.realestateweb.co.za