Demand for Cheaper Housing Stays High
The latest house price index shows that residential property continues to slow down, but there is still strong growth at the cheaper end of the market. According to the Absa house price index for June, y/y growth was 14.9% on average.
The average house price on Absa’s books now stands close to R1m, at R924 800. The National Credit Act has an effect on the growth in house prices that could only become visible in a few months’ time.
When the Finance Minister Trevor Manuel announced in last year’s Budget that transfer duty was abolished on amounts of R500 000 or less, house prices received a slight boost. John Loos, FNB Commercial Property Strategist, says that the lower one goes (down the price scale), the stronger the performance is. This ties in with the bank’s experience in the area of affordable housing at FNB, where an almost unlimited demand is seen.
At the end of 2003, prices of sectional-title properties were growing at about the same rate as freehold houses, but since then freehold houses have been stronger. All kinds of housing in all affordability segments are seeing double-digit growth rates.
Standard Bank believes that the strong macro-economic setting should help keep y/y house price growth in low double-digit rates for the rest of the year.
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