SA's house price growth 'slowest in years'

Fuelled by an "all-around onslaught" on consumers' finances, house price growth is at its lowest in years and is expected to continue its declining trend and register nominal growth of between 13 percent and 14 percent for the full year, compared with a growth rate of 22,9 percent in 2005.

According to Standard Bank's latest residential property gauge, house price data continued to reflect "softening consumer activity".

Last month, house prices were 2,9 percent higher than in September last year - the slowest growth rate since December 2002.

"The onslaught on consumers' finances from all around - record-high petrol prices, soaring food prices and rising interest rates - is taking its toll," the report said.

The latest Absa House Price Index reported that nominal year-on-year house price growth was forecast between 7 percent and 8 percent for next year, which would be the lowest since 1999, when it was 4,6 percent.

Herschel Jawitz, chief executive of Jawitz Properties, said there was a "slow down" in prices in general.

But the slow down of unit sales - much more accurate a gauge of property trends - was not as marked as that of the decline in house price growth.

"There are still no bargains out there," he said, although without the volume of buyers "tripping over their feet", sellers were having to be more realistic in terms of the prices their properties could fetch.

"The number of days it took to sell a house and the gap between the original asking price and the selling price both had widened at the luxury end of the market (properties R5m and up) by as much as 15 percent," he said.

Standard Bank also reported "substantially reduced enthusiasm for buy-to-let properties from investors". This meant a "relatively bleak" outlook for further expansion in the housing market.

Central city property developer and selling agent Theodore Yach said between 15 percent and 20 percent of all residential units bought in the central city during the last three years were buy-to-let properties.

He expected there to be some forced sales and auctions where speculators - those who had purchased with the express intent of turning the property for a quick profit - had over-committed themselves.

With property one had to take a 20-year view, he said. Even though there might be blips en route, "property goes up, it's as simple as that".

"People must just hang on, take a deep breath and not panic."

  • This article was originally published on page 4 of Cape Times on October 05, 2006

Article By: Dominique Herman