Cape Town - The residential housing market is stable but shows little upward movement in real price levels, the latest First National Bank House Price Index (HPI) for September showed on Tuesday.
“The FNB HPI showed a further slight acceleration in its year-on-year growth rate, from (the) previous month's revised 6.3 percent, to 6.6 percent in September,” the financial institution said in a statement.
“While not a rapid acceleration, it represents the third consecutive increase in house price growth since the six percent rate recorded in June.”
The average price of homes bought was R900,907.
Nominal house price inflation has generally tracked Consumer Price Inflation (CPI).
“Recent economic events continue to by-and-large explain this real price stability without 'fireworks'. The economy, too, could arguably be deemed to be stable but without significant growth, growing positively but battling to grow even by two percent in recent quarters.”
The recent stability and mild improvement was a combined result of positive residential demand growth and a more constrained supply of residential stock on the market.
Since early 2012, the FNB Valuers' Market Strength Rating Index had shown gradual positive year-on-year growth after a 2011 decline.
“It still remains below the crucial level of 50, at 47.33, implying that the residential demand rating of 51.04 is still weaker than the 56.38 residential supply rating.
In the second quarter of this year, there was a noticeable increase in the number of residential units plans passed, suggesting a more rapid rate of completions in the future.
“The question then remains as to how rapidly the residential building sector can respond in increasing supply of new stock.”
House price growth was expected to remain stable in the near term.
“Mediocre household income and consumption numbers should point to mild demand growth at best.” - Sapa