Further rise in house prices : FNB

The FNB House Price Index on Tuesday showed further growth in March compared to February.

Year-on-year growth accelerated from a February revised figure of 6.2 percent to a March rate of 8.6 percent.

FNB's home loans strategist John Loos said in a statement this remained mostly the result of five percentage points' worth of interest rate cuts in 2008/09.

It was also believed to be increasingly supported by the economic growth recovery under way, and the resulting return to positive real household sector disposable income growth from the fourth quarter of 2009.

The average house price in the index was estimated at R779,546.

From the bottom point of the 2008/09 price slump in June 2009, the cumulative nominal increase in the FNB House Price Index as at March amounted to +11.8 percent.

Since the start of the index numbers back in July 2000, almost 10 years ago, the cumulative increase to date was 197.9 percent, Loos said

In real terms (adjusted for consumer price inflation), house prices started to increase from August 2009, and had risen cumulatively by +10.6 percent.

"This comes after a lengthy period of real house price decline of -20 percent spanning from March 2008 to July 2009."

Loos said that finally, in February, real house prices started to inflate in year-on-year terms too (February 2010 compared to February 2009), to the tune of 0.5 percent, with nominal house price inflation of 6.2 percent in that month exceeding the consumer price inflation rate of 5.7 percent.

"Since the start of the index numbers back in July 2000, almost 10 years ago, the cumulative increase in real terms to date is 71.6 percent," Loos said.

He said presently FNB valuers still pointed to many oversupplied areas in the country.

"However the mismatch between aggregate demand and supply has been slowly diminishing," Loos said.

While the building sector still expected to recover mildly later in 2010, Loos said the new house against the existing house price gap still made it relatively unattractive to build at this stage.

Sapa

Posted at 10:36AM Apr 07, 2010 by Editor in Residential  |  Comments[2]