SA house prices are cooling rapidly - survey
The property market is cooling rapidly after more than five years of double-digit increases in the prices of houses and political uncertainty could dampen it further, says an international review.
Although South African house prices rose by more than 10 percent year-on-year in nominal terms, the inflation-adjusted figures were substantially lower, according to the Global Property Guide, a review of the world's housing markets last year.
In 2006, house prices in South Africa rose by 15.12 percent. At the end of last year, the increase was 12.52 percent.
Adjusted for inflation, however, the nominal increase last year was 3.77 percent.
The review said the housing price boom in South Africa was coming to a near-halt.
But the chief economist for the Efficient Group, Dawie Roodt, said home owners and property agents had nothing to worry about as house prices continued to rise, although sales were slower.
House prices were rising at a slower rate. There were signs of slight increase across the market, Roodt said.
"Looking at the general picture, we see that house prices have not (slumped), but the prices of the more expensive homes have certainly been affected (by interest rate increases)," said Roodt.
The review said annual house price growth peaked at 33 percent in 2004. Since then, growth had been decelerating and was down to 13.6 percent year-on-year at the end of October. Adjusted for inflation, the house price index rose by only 5.3 percent.
The review said the slowdown was because of higher interest rates, lower economic growth, and the National Credit Act.
"The housing market is likely to be dampened by political uncertainty associated with the 2009 elections, given the pro-redistribution rhetoric of frontrunner Jacob Zuma," the review said.
Bruce Mostert, a property agent with Seeff Properties, disagreed with the review, saying the market had done "considerably well" in the past year.
"I don't think house prices have taken a (drop) or that we are anywhere close to a halt," he said.
"(The market) has slowed down somewhat over the past few months, however."
Article by: Clayton Barnes - www.capetimes.co.za