House prices show growth, buy now

South African house prices have grown to 4.6 percent in July from 3.1 percent in June as revealed in the FNB House Price Index released yesterday.

FNB Home Loans property strategist, John Loos says in real terms when adjusted for consumer price inflation, the year-on-year growth for June remained in negative territory to the tune of -1.8 percent.

“On a month-to-month basis, average price growth was unchanged at 0.73 percent while the average price of properties transacted in the index was R815. 511,” says Loos.

He explains that the acceleration in the year-on-year rate of house price inflation is believed to still be the lagged impact of a mild uptick in residential demand as reported in the FNB Estate Agent Survey. Two further cuts in interest rates in late 2010 being the other factor.

The highest point in real terms growth was recorded in February 2008 in the FNB House Price Index’s 11 year history. The cumulative downward adjustment in real house prices from the high of February 2008 to July 2011 measures -14.7 percent. In nominal terms, the index revealed a mild cumulative increase of +6.4 percent from February 2008 to July 2011.

“Our expectation is for the recent acceleration in house price growth to be short-lived, with a slowing in the pace of growth resuming late in 2011,” Loos said.

The property market may not be what it used to be what with many people battling to secure home loans and some home owners selling to become tenants. Estate agents, however, say in some areas, they are seeing an increase in property buyers. Even with house prices declining, with careful search one can easily find bargains.

Info supplied by Property24.com