The most recent survey by South Africa’s Standard Bank officially makes South Africa a buyers market indicating that median prices for homes fell 11.3% in June year on year. The average house price in the country for June, 2008 was R550,000 compared to R620,000 a year earlier.
About the lower sales prices, a Standard Bank spokesperson noted that: “This is due to a confluence of headwinds confronting the South African consumer. These include high interest rates and inflation, as well as additional hurdles of accessing credit brought about by the NCA. In our view, declines in the demand for property of this magnitude and duration are not inconsistent with national house price deflation”.
South Africa’s central bank has raised interest rates 500 basis points over the past two years as it attempts to combat inflation. Additionally, the country implemented the National Credit Act last summer as it tried to clamp down on excessive lending practices.
Statistics South Africa also released its own set of reports recently, noting that building plans have fallen below levels last seen in 2000. For May, the value of new buildings planned fell by 36.2% year on year. Residential buildings were the main reason for the lower amounts, as the market has seen quite a turnaround over the past year.
Many homeowners will see their properties see a drop in valuations in the coming months, according to the most recent Absa’s Housing Review. For the first quarter of 2008, the review showed that real house price growth slowed to an annual rate of 3.5%, which is down from 9% in the fourth quarter of last year.
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