House Prices Fall
An article on the Bloomberg News website reports that South African house prices have dropped for the first time in 8 years, as borrowing costs continue to rise, this is according to Africa’s biggest lender, Standard Bank Group Ltd.
The average price for a house in South Africa has fallen from R580 000 in 2007 to just R550 000 today. This is the first decline since June 2000. According to Standard Bank, “the persistent deterioration in the demand-side drivers of the South African economy of late has increased the chances of negative growth in residential property prices,” leaving the South African consumer “under strain” (Bloomberg).
Interest rates increased four times between June and December last year, reaching 11 percent as inflation exceeded the 3 to 6 percent target range. Standard Bank reports that house price inflation slowed to an average 8.3 percent in 2007, down from 9.8 percent in 2006.
Standard Bank holds a market share of around a third of South African home loans and calculates the index from the average house price of mortgage applications that it receives. Absa Group Ltd is the country’s biggest mortgage lender and reports that house price inflation slowed to an 8 year low of 8.7 percent in February this year. Absa also calculates the rate of inflation from the median house price of mortgage applications it receives, which is estimated at R969 000.
The information in this article is courtesy of Vernon Wessels (“South African House Prices Fall for First Time in Eight Years”, Bloomberg News, 1 April 2008).
If you would like to buy or sell property in South Africa, please visit www.sahometraders.co.za.
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