House prices under strain
| The household sector, plagued by lower levels of employment
and declining real disposable income, was expected to continue experiencing
financial strain this year, Absa said on Monday.
This was in spite of declining interest rates, according to senior property analyst Jacques du Toit.
In the first quarter of 2009 nominal house prices declined on a year-on-year basis for the first time since late 1986 while in real terms (after adjustment for the effect of inflation) prices dropped over a wide front as a result of inflation trends and declining nominal prices, he said.
According to Du Toit, the average nominal price of affordable housing increased by 4.5 percent year-on-year in the first quarter of 2009, compared with price growth of 5.9 percent in the fourth quarter of 2008.
In real terms prices declined by 3.6 percent year-on-year in the first quarter.
Middle-segment house prices dropped by a nominal 0.3 percent year-on-year in the first quarter of the year after increasing marginally by 0.2 percent year-on-year in the fourth quarter of last year.
"In real terms prices dropped by eight percent year-on-year in the first quarter from a decline of 9.2 percent year-on-year recorded in the preceding quarter," Du Toit said.
In the luxury segment of the market house prices increased by a nominal 4.5 percent year-on-year in the first quarter of 2009 (7.6 percent year-on-year in the final quarter of 2008).
The average price of houses in this category dropped by 3.6 percent year-on-year in real terms compared with a real decline of 2.6 percent year-on-year in the fourth quarter of last year.
"House price growth in various provinces, metropolitan areas and coastal regions was negative in both nominal and real terms on a quarterly and annual basis in the first quarter of 2009," Du Toit said.
He added that the affordability of housing had improved further towards the end of last year, based on the ratio of house prices as well as mortgage repayments to household disposable income.
"However, in view of current economic conditions, few households are in the position to take advantage of these developments with regard to the affordability of housing," Du Toit said.
Article from: www.iafrica.com