Property prices, after adjustment to take into account the impact of inflation, increased in the first quarter of this year after deflating for nine consecutive quarters from the fourth quarter of 2010 until the end of last year.
Absa's latest quarterly housing review revealed that the growth in real house prices was driven only by the three middle segments of the housing market. Affordable housing achieved virtually no real yearon-year price growth in the first quarter, while the real price of luxury housing declined by 9.2 percent in the first three months of the year, following a 7.2 percent decline in the fourth quarter of last year.
The review revealed that the price of small houses, defined as those with an area between 80m2 and 140m2, increased in real terms by 9.5 percent year on year in the first quarter, medium-sized houses (141m2 to 220m2) increased by 4.4 percent and large houses (221m2 to 400m2) by 2.2 percent.
Jacques du Toit, a property analyst at Absa Home Loans, said nominal year-on-year price growth in the middle segment of the market, which consists of houses between 80m2 and 400m2 and priced up to R3.8 million this year, accelerated to above the 10 percent level in the first quarter of this year.
However, Du Toit said early indications of a moderation in price growth later this year emerged in the first quarter.
The review also revealed that it was 35.5 percent cheaper to have bought an existing house in the first quarter than to build a new one. This translated to an average R610 600 saving for an existing house.
The cost of building a new house increased by 5.4 percent year on year in the first quarter and the average price of a new house rose by 8.6 percent year on year to about R1 720 000.
However, the average price of an existing house rose by 10.8 percent year on year to R1 109 500 in the first quarter, which was a real year-on-year increase of 4.8 percent.
Meanwhile, Lightstone said yesterday it expected less home repossession this year.
It said the number of homeowners who received sale in execution notices decreased to about 17 000 last year from the 33 000 during the subprime mortgage crash in 2009 and decreased from 29 percent in 2000 to 5 percent last year; while the proportion of homeowners who received sale in execution notices whose properties were sold at auctions increased from 12 percent in 2000 to 19 percent last year.
Lightstone believed these trends might be an indication that loan providers had been making more arrangements with defaulting homeowners as opposed to repossessing their properties.
Lightstone said it was reassuring to see that more people had recently been able to hold onto their homes because this was encouraging for the greater economic well-being of South Africa.
"It seems that even though the recession has placed strain on homeowners, the proportion of homeowners who end up having to sell their properties is now lower than what it was in 2000, providing some light at the end of the tunnel for the homeowners expected to receive sale in execution notices in 2013," it said.
|Click HERE to visit us on Facebook|