Deflating in house prices is easing off, says ABSA survey

The managing director of Greeff Properties, Graham Leslie, has drawn attention to the August ABSA house price index.

“This,” said Leslie, “shows that there are now clear indications that the deflation trend which has been evident since the second quarter of 2008 is slowing down significantly and when measured on a year-on-year basis is nearing its turning point. Measured on a month-on-month basis there is clear evidence that it was at its maximum point in March and since then has slowed.”

Prices for medium sized (141 to 220m²) and smaller houses (80 to 140m²) were both down 4,8% year on year (while large houses were actually up by 0,4% to an average of R1 390 700) but this drop was far less than that of the previous year.

Although ABSA economist, Jacques du Toit sees prices declining further in nominal terms towards the end of this year and quite probably into 2010, he is predicting that the deflation rate will be slower for the remainder of this year. ABSA foresees a maximum deflation rate of 3,5% this year.

“ABSA,” said Leslie, “have never been the sort of analysts who pull their punches or talk the market up, so we can confidence now that, with demand pent-up by the last year’s difficulties in getting mortgage bonds, sales will increase from now on.”

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