SA house prices rise at slower pace

August 04, 2005, 16:00

South African house prices recorded their slowest nominal monthly growth in three years in July and growth is expected to ease further this year, mortgage lender Absa said.

The country's largest retail bank said house prices rose by a nominal 0.9% month-on-month in July, the lowest since March 2002. In June, prices rose by 1.1% compared to May. South African property has soared by around 200% since 1997. In 2004, house prices hit a 38-year peak, fuelled by the lowest interest rates in over two decades.

Healthy growths
But market players said the slowdown was limited to the upper end of the market, which has enjoyed a property boom over the past few years, while growth in other sectors remains healthy.

"I think as with any market, stock market or currency market, levels got too high. I think buyers or investors are taking a step back and saying 'Is there still value?'" Herschel Jawitz of estate agents Jawitz Properties, said.

Prices rose by a nominal 21.4% in July from a year ago. Absa also released real term figures for June, taking headline consumer inflation into account, showing prices were up 19.9% on June 2004. The nominal year-on-year increase in June, released by Absa last month, was 23.3%. The bank expects prices to rise by 20% for the full year compared to last year's 32%.

"Against this background, the affordability of housing will remain an important factor over the next 12 months, especially for first-time buyers," Jacques du Toit, an Absa economist, said in a research note. - Reuters

Supplied by Dave Welmans www.thepropertygame.co.za

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