Property Investment Cape Town
We are looking for
Property Developers!

House price growth slowdown predicted

Area value bands point to a decrease.

A slowdown in the growth of house prices in certain segments of the property market appears likely, a recent FNB Estate Agent Survey found.

Household and property sector strategist John Loos said the survey pointed to a loss of momentum after a very good run.

Various economic indicators, including the Gross Domestic Product and household disposable income growth, had been slowing, and interest rates had begun to rise.

“Therefore, it has come as little surprise to see our FNB National House Price Index having shown early signs of slowing inflation through the first half of 2014…”

There were also signs of slacking off in some of the house price indices for the four major metro value bands.

The area value bands were the “upper income area” band with a second quarter average price of R2.148 million, the “middle income area” with average value R1.3m, the “lower middle income area” with average value R828 190, and the “low income area” with average value R440 536.

“Notably, the upper income value band was first to suggest that, while it has a very good demand-supply balance… there may well be an affordability limit for a financially-constrained household sector,” Loos said.

“Therefore, this upper income value band’s year-on-year price inflation turned downward first, and recorded a 5.1% growth rate for the second quarter of 2014, down from a ‘high’ of 7.4% four quarters ago.”

Other income value bands appeared to be following this trend, with the lower middle income segment growth decreasing from 6.7% year-on-year in the first quarter to 6.4% in the second quarter.

“Low income area year-on-year price growth accelerated only marginally, from 7.3% previous to 7.4%, and the middle income area segment was the only one left showing noticeable inflation acceleration, from 7% previous to 7.4% year-on-year in the second quarter of 2014.”

As such, slowing price inflation rates were predicted in all four value bands in the second half of 2014.

Leave a Reply

Your email address will not be published.