South African banking group Absa said today that the declining trend
in year-on-year house price growth, which commenced late last year,
continued last month.
According to the latest Absa House Price Index, nominal year-on-year
growth of 23.6% in house prices was recorded in April. The revised year-on-year
growth for March came to 26% (26.8%).
Absa said in its monthly release on house prices, that in real terms
year-on-year growth of 22.4% was recorded in March compared with a revised
growth rate of 25.1% in February, based on the headline consumer price
The average real year-on-year growth in house prices during January
to March was 24.7%, which is based on a headline CPI inflation rate
of 2.8% on average during this period.
On a month-on-month basis, nominal growth in house prices was 0.6% in
April compared with a revised 0.8% in March this year. Absa commented
that the current declining trend in month-on-month growth started in
January 2004, with this measure of house price growth now at its lowest
level since September 1999 when it was 0.5%.
In real terms, month-on-month growth of 0.2% was recorded in March,
implying that house prices have declined in real terms from February
to March this year. These trends in month-on-month growth are an indication
of still lower year-on-year growth as the year progresses, Absa added.
Based on recent trends in house price growth and interest rates, the
average monthly mortgage repayment and the qualifying gross monthly
income were 17.5% higher in April 2005 compared with April last year
(22% in March).
The lower figure for April compared with March was mainly the result
of slower growth in house prices as well as slightly lower interest
rates in the past month. The year-on-year percentage growth in mortgage
repayments and qualifying income has been on a declining trend since
January 2005 after a recent high of 26,8% was recorded in December last
In view of this analysis, housing is still less affordable than a year
ago, but the 2004 trend during which housing became increasingly unaffordable,
appears to have turned around in early 2005, it said.
Looking ahead, Absa said nominal growth in house prices of between 15%
and 20% is still projected for 2005, compared with growth of about 32%
in 2004. In real terms, house price growth is expected to remain positive
in 2005, albeit lower than the 30.2% recorded last year.