ABSA Housing Price Growth Review: Fourth quarter 2012

Posted On Tuesday, 20 November 2012 11:53 Published by eProp@News
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On a year-on-year basis, some marginal nominal house price growth was recorded in the middle segment of the market (homes of 80m² - 400m² and priced up to R3,6 million in 2012) in the third quarter of 2012.

Jacques du Toit

However, in real terms, i.e. after adjustment for the effect of consumer price inflation, house prices continued to decline compared with a year ago, with the pace of real price deflation slowing down in the quarter. In the category for affordable housing, year-on-year price growth remained in positive territory in both nominal and real terms in the third quarter, whereas in the luxury segment price growth remained low in nominal terms, with real price deflation continuing unabatedly in the quarter. 

The latest trends in house prices are a reflection of property market conditions in general, impacted by a combination of macroeconomic developments, the state of household finances and the level of consumer confidence. In view of these factors, the demand for and supply of housing might be affected by changes in buying trends, market activity and eventual transaction volumes.

The residential property price trends presented in this report are based on the value of properties for which Absa received and approved applications for mortgage finance. Real price calculations are based on nominal prices deflated by the headline consumer price index. 

All price data series are smoothed in an attempt to exclude the distorting effect of seasonal factors and outliers. As a result, recent price data and growth rates may differ from previously published figures.

Middle-segment housing
Average nominal price growth in middle-segment housing (homes of 80m² - 400m² and priced at R3,6 million or less in 2012), came to only 0,4% y/y in the third quarter of the year, after price deflation of 1,9% y/y was recorded in the preceding quarter. The average house price in this segment of the market was around R1 073 500 in the third quarter. Real price deflation continued in the middle segment, coming in at 4,4% y/y in the quarter, after prices dropped by a real 7,2% y/y in the second quarter.

The following house price changes occurred in the three middle-segment categories in the third quarter of 2012:
• Small houses (80m² - 140m²): -6,2% y/y nominal and -10,7% y/y real.
• Medium-sized houses (141m² - 220m²): 2,1% y/y nominal and -2,7% y/y real.
• Large houses (221m² - 400m²): 2,6% y/y nominal and -2,2% y/y real.

Luxury housing
The luxury segment of the market (homes priced at between R3,6 million and R13,4 million in 2012) showed nominal price growth of 0,8% y/y to a level of R4 790 400 in the third quarter of 2012, after prices rose by 2,1% y/y in the second quarter. In real terms, the average price in this category of housing dropped further by 3,9% y/y in the third quarter of the year (-3,4% y/y in the second quarter). 

Regional house prices House price trends varied on a regional basis, i.e. at a provincial, metropolitan and coastal level, with annual and quarterly price growth evident in a number of geographical areas, while in a few regions prices
continued to decline in the third quarter of 2012 (see tables at the back of the report).

General economic trends have an impact on the performance of the residential property market at geographical level, but these regional markets may react differently to these developments as a result of a number of area-specific factors, such as location, physical infrastructure and the level and extent of economic development and growth. These factors may affect property demand and supply conditions, market activity, buying patterns, transaction volumes and price
levels and growth.

Last modified on Wednesday, 12 March 2014 16:52

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