House Price Deflation Continues to Slow Down

The information in this article is courtesy of Business Report (Absa: House prices set to rise again – 7 October 2009)

The latest Absa house price index showed that nominal year-on-year price deflation in the housing market has slowed down even further in September 2009.

Jacques du Toit, Absa’s senior property analyst, believes that if these trends continue, South Africa might see house prices rising in the near future.

On a month-on-month basis, prices continued to rise in September after reaching a lower turning point in April this year.

Absa said that middle-segment house prices were down by a nominal 0.3 percent year-on-year to R966,300 in September 2009, from a revised -1.1 percent year-on-year in August.

On a monthly basis, house prices increased by a nominal 0.8 percent in September, from a revised increase of 0.9 percent in August.

Absa said that by September, the average house price was 3.4 percent up on the low reached in April 2009.

In real terms, house prices in the middle segment were down by 7.1 percent year-on-year in August (versus -8.2 percent year-on-year in July).

Prices of small houses (80m-140m) were a nominal 4.2 percent year-on-year lower in September (versus -4.4 year-on-year in August after revision).

"This brought the average nominal price of houses in this segment to about R651,400 in September," Du Toit said.

With regard to medium-sized houses (141m-220m), the average nominal price declined by 5.2 percent year-on-year in September (versus -4.7 percent year-on-year in August after revision), which brought prices in this category of housing to an average of R901,700.

According to Absa, this translated into a real price decline of 10.4 percent year-on-year in August (versus -10.2 percent year-on-year in July).