House price growth!

House price growth has slowed to a crawl in September according to a report by Standard Bank. Standard Bank's median house price (smoothed) posted a growth rate of 0.6 percent year on year (y/y) in September, from 1.6 percent y/y in August whereas growth in real terms remained negative. The slowdown in house price growth runs parallel with the weakening SA economy.

GDP growth slowed to 1.3 percent quarter on quarter (q/q) seasonally adjusted annual rate (saar) in the second quarter of 2011, from 4.5 percent q/q (saar) in the first quarter. Home prices still falling.

Trends in house prices remained mixed in the South African housing market, based on the Absa house price indices for small, medium-sized and large houses, for which the bank had approved mortgage finance. House prices still mixed.

John Loos, property strategist at FNB Home Loans said that estate agents estimated a decline in the percentage of sellers selling their homes in order to downscale due to financial pressure, from 25% in the previous quarter to 19%. He said that this could be the start of results from the long process of household debt-to-income reduction, and other measures aimed at rebuilding balance sheets, coming through. "It is too early to tell though, and another few data points will be required. But we do know from SARB (South African Reserve Bank) data that the decline in the household debt-to-disposable income ratio, and thus the debt-service ratio, continues."

The third quarter survey, undertaken in August, points towards a slight increase in residential demand, and some mild improvement in estate agent confidence, but it's not a market with any strong direction. Households debt pressure reducing.

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