SA house price growth slows further

House prices fell on an annual basis for the first time in almost eight years

The growth in house prices in SA has slowed down further, ABSA's House Price Index, released today, indicated. The index showed the average price of a middle-segment house was about R980 400 in March this year and that house price growth was the lowest in eight years.

Nominal house price growth of 8.7% year-on-year was recorded in the middle segment of the market in March 2008, compared with a revised growth rate of 9.5% in February, ABSA said. Average nominal house price growth came to 9.5% in the first quarter of the year (12.4% in the final quarter of 2007).

"The slowdown in year-on-year house price growth has accelerated since September last year, mainly driven by further interest rate hikes in the second half of last year, a significant slowdown in growth in real household disposable income up to the end of 2007, and the full implementation of the National Credit Act in mid-2007." House price growth was expected to slow down even further this year from current levels.

Nominal price growth of around 7% (about 2% in real terms) was projected for the full year. This would be the lowest nominal growth recorded in house prices since 1999, when it was 4.9% ABSA said. - Sapa