Another drop in house price growth
The lowest house price growth in six years was recorded for April, according to the Absa House Price Index (HPI).
Nominal house price growth for April was 12,8% y/y, compared with a growth rate of 13,7% in March and 14,6% in February. Houses are still rising in value at well over the inflation rate.
House price growth dipped to its lowest value in January 2000 when it was 11,8%.
Average nominal house price growth for the first four months of the year was 14%.
Absa still projects about 12% average nominal house price growth for 2006.
On a month-on-month basis, normal growth in house prices was down to 0,5% in April compared with a growth rate of 0,7% in March, said the report.
Real house price growth was down 0,2% to 10% in March, based on the headline consumer price index.
Based on the current mortgage interest rate of 10,5% and the average price of a house in April this year, the monthly mortgage repayment and the gross monthly income required in order to afford a 100% mortgage, were 11,1% higher in the past month compared with April 2005 when the rise was 20,1%, revealed the report.
Absa said the significant cut in transfer duties on properties, announced in the Budget in February, did not lead to stronger growth in house prices during March and April, although volumes did appear to have increased over this period.
Article by: Gaylyn Wingate-Pearse - www.moneyweb.co.za