Langebaan Country Estate with view of golf course. Picture: Just Property
JOHANNESBURG - House price growth rates for the top three most expensive home categories has slowed down and in some instances stabilised, indicating that it might be coming to an end.

John Loos, a household and property sector strategist at FNB, said the luxury area value band had experienced the most significant year-on-year house price growth slowing in recent years, from an 11percent high in the final quarter of 2014 to 5.1percent in the fourth quarter of last year.

It was followed by the upper income value band, whose price growth had slowed from 7.4percent at the end of 2014 to 4.7percent in the fourth quarter of last year.

“But stabilising quarter-on-quarter growth rates of late may suggest that this year-on-year slowing is near its end,” he said.

Loos came to this conclusion despite further slowing in the year-on-year house price growth rates of the three highest-priced area value bands in the fourth quarter and some further acceleration in the growth of the two lowest-priced area value bands.

The low income area house price index grew the strongest at 14.2percent year-on-year for the fourth quarter from 12.5percent in the third quarter ,while the lower middle income area value band grew to 7.6percent from 7.1percent in the same period.

By contrast, year-on-year house price growth slowed in the fourth quarter in both the middle income and upper income area value bands to 4.7percent from 4.9percent, while the luxury category eased to 5.1percent from 5.6percent.

The average price of homes in the luxury area value band was R2.335million, upper income area value band R1.242m, middle income area value band R887930, lower middle income area value band R583858 and low income area value band R362110.

The national slowing year-on-year house price growth for the three most expensive home categories was in contrast to reports about average house prices in Cape Town’s Atlantic Seaboard suburbs.

Seeff Property Group reported that despite more subdued trading conditions during the past two years, the average selling prices of full title homes in the top five suburbs on the Atlantic Seaboard was edging closer to the R20m price mark.

It said these five suburbs were also the top five suburbs in the country.

Seeff ranked the top five suburbs according to average selling price for a full title house last year, based on data from both Propstats and Lightstone.

These ranking were Clifton (R18m), Llandudno (R17.8m), Bantry Bay (R17.7m), Camps Bay (R17.7m) and Fresnaye (R16.6m).

Seeff said more than 80percent of sales were to local Cape buyers, followed by Johannesburg and foreign buyers, who comprised only about 20percent of all sales.

Meanwhile, FNB has cautioned about major potential distortions in the low income area house price index, the strongest performing area value band, because it included the subsidised housing component.

Loos said new homes in this category, which were not sold to their new owners, were registered at a value at the deeds office that did not reflect any market value, while periodic sell-offs of rental stock by councils had also not necessarily taken place at market value.

“Such distortions mean that in a repeat sales index for low income areas, many home prices come off a very low base not reflective of market values and show major price inflation when resold at market value at a later stage,” he said.