Growth in South African House Market

April 9 - First National Bank (FNB) was optimistic this week after issuing a statement showing that house prices are on the way to stabilizing.

"Another milestone appears to have been reached by the residential property market on its road towards stabilization and recovery," read the FNB report, "and this comes in the form an apparent end (at least for the time being) to the improving affordability trend that we saw taking place from early 2008 into 2009."

The bank said that the cause of this was mainly due to the Reserve Bank's insistence of cutting interest rates during 2008 and 2009 - directly affecting the growth rate in a positive way.

According to FNB, year on year growth was indicated by an increase from 6.2% in February to 8.6% in March (revised).

FNB put the average national house price at R779,546.

Real term house price growth begin in August last year and since then has reached a figure of 10.6%.

According to John Loos, FNB's home loans strategist, this comes after a lengthy period of real house price decline of minus 20 percent from March 2008 to July 2009.

"Since the start of the index numbers back in July 2000, almost ten years ago, the cumulative increase in real terms to date is 71.6%," he said.

Despite this positive outlook, FNB still showed that there were many areas in South Africa where supply clearly outstripped demand.

"However," said Loos, "the mismatch between aggregate demand and supply has been slowly diminishing."

4/9/2010 2:05:33 PM