Roy Cokayne
Nominal house prices had grown by 211.6 percent from June 2000 until last month despite the significant cumulative downward adjustment in price levels since the peak of the residential property boom in 2008, FNB Home Loans said on Monday.
House prices, adjusted to take into account the impact of inflation, were 66.2 percent higher in June than they were 11 years earlier, it added.
John Loos, a strategist at FNB Home Loans, said that there had been a 14.7 percent cumulative downward adjustment in real house prices from the highest point in FNB’s house price index in February 2008.
Loos said residential property had had a very tough economic period and been relatively weak since 2008.
In nominal price terms, the index had shown a mild cumulative increase of 6.4 percent from February 2008 to July this year, he said.
In the near term, the ongoing weakness in the balance between demand and supply and economic factors, continued to suggest that the residential property market remained vulnerable to further downward adjustment in prices “if not in nominal terms then at least in real terms”.
There has been a mild acceleration in recent months in the year-on-year growth rate of FNB’s house price index. Growth rose to 4.6 percent last month from a revised 3.1 percent in June.
Loos said that the domestic economy and to a large degree the housing market were very much in sync with trends in the global economy, which at present showed signs of weakening.