House price growth flat: Standard

South African median home prices were flat for the second consecutive month in January after moderating to 6.5% year on year in November from 10.2% year on year in October, the Standard Bank’s property gauge showed.

In level terms, the median house price was recorded at 570,000 rand, bringing the five-month moving average growth rate to 4.4% - the lowest it has been since November 2000.

House prices have been pulling back from their peak of 35.5% year on year growth in October 2004 as higher interest rates and tougher credit-granting laws eat into buyers’ pockets.

The average rate of growth for 2007 as a whole was 8.3%, the lowest average house price growth in the residential property prices in seven years.

"The stagnation in house prices is in line with the general weakness on the demand side of the South African economy, said Sizwe Nxedlana, Standard Bank property economist.

The monthly Standard Bank median house price has been in the 550,000 rand to the 620,000 rand range since December 2006.

"There is no obvious source of growth that will provide a near-term impetus for residential property from either fiscal or monetary policy. Therefore, house price growth this year will in all likelihood be lower on average than the 8.3% growth recorded last year," said Nxedlana.

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