House Prices Rising

November 6 - According to Absa, home prices are on the rise in the South African property market, with figures climbing 2.6% in October in year on year comparison.

"The latest trend with regard to house prices are encouraging, which are based on a further rise in transaction volumes in October, compared with September, said the Senior Property Analyst for Absa, Jacques du Toit.

"This came after transaction volumes appear to have bottomed in August this year," he added.

Du Toit said that the positive trends in the economy as a whole had a direct impact on the property industry.

"Despite massive job losses recorded in the third quarter of 2009, there are indications from various economic indicators, such as the South African Reserve Bank's leading and coincident business cycle indicators, that the economy is on its way to recovery," said du Toit. "Although the household sector is still very much under pressure on the back of declining employment, while real disposable income growth is negative territory, housing market conditions are expected to improve further towards the end of the year and into 2010."

Du Toit said that the combined effects of a loosening lending criteria among banks, as well as lower interest rates and overall better economic conditions had provided a sound base on which to grow the property market.

"Taking account of house price trends in the first ten months of 2009, nominal price deflation of less than 1.5% seems possible for the full year compared with 2008," he said.

Standard Bank said that prices would only pick up from next year, showing slightly less optimism than Absa's predictions.

However, both Standard Bank and Absa, as well as FNB believe that the worst is over for now in the residential property market.

11/6/2009 10:21:26 AM