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Property Industry News

Average house price growth to decline for third year in a row

06 Dec 2017

The average year-on-year house price growth for this year was likely to be slower than last year, despite year-on-year house price growth accelerating mildly in recent months.

John Loos, a household and property sector strategist at FNB, said yesterday that this would represent the third consecutive year of slowdown in house price growth.

"Average house price growth for 2017 as a whole will not be far above 3 percent, down from an average 4.7 percent in 2016 and a multi-year high of 7 percent reached in 2014," he said.

Loos said FNB's expectation at the beginning of the year had been for a 3 percent average house price growth this year.

In real terms, the gradual correction in house prices continued in October this year, with the real rate of house price change remaining mildly negative at a -0.4 percent yearon-year decline.

Loos added that real house prices on a cumulative basis were in October -19.9 percent down on the December 2015 high. However, he said that despite a mediocre performance in recent years, when looking back further the average real price currently remained a massive 65 percent above the end-2000 level 17 years ago.

Without adjusting for inflation, average prices last month were 318.26 percent higher than the end-2000 level. Loos said consumer goods and services prices, as measured by the CPI, were by comparison only 156.69 percent higher over virtually the same period.

FNB reported yesterday that its house price index for last month rose by 4.6 percent year-on-year, which was a mild further acceleration from the revised 4.4 percent growth recorded in October this year.

In real terms, the gradual correction in house prices continued in October this year, with the real rate of house price change remaining mildly negative at a -0.4 percent yearon-year decline.

However, Loos said this was a reduction in the real house price deflation rate from -0.9 percent year-on-year in September this year and from a low of -4.8 percent reached in December last year.

Loos attributed the diminished real price decline in October this year partly to the acceleration in the year-onyear house price inflation rate to 4.1 percent in October from 4.4 percent in September.

He added that a decline in CPI inflation from 5.1 percent year-on-year in September to 4.8 percent in October also assisted in curbing real house price decline.

The average price of homes transacted in September was R1 103 092.


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