Minor Home Value Increases Next Year

December 14 - The new year (and decade) should bring with it some good news for South African homeowners.

For the first time in a number of years, real prices could push up to zero by the beginning of 2010, and even increase to 1 or 2%.

Absa Home Loans said that while these numbers are obviously not like the value increases of up to 30% experienced 5 years ago, it is still a vast improvement from the negative numbers seen in the South African housing industry since 2007.

"After taking inflation into account, the increase in real terms is likely to be only 1%," said Jacques du Toit of Absa.

"However, that is better than the negative figures since 2007," he added.

House prices rose in nominal terms when it came to the mid segment of the housing market, with November's average price fixed at R1,006,000.

Small homes fared less well in October, with nominal prices down by 1.7%.

Translated into real terms, this showed a 7.7% decline.

A large home in South Africa averages at R1,419,700 (nominal price in November).

In general, while the South African economy is on its way to recovery, the average household is still struggling, according to du Toit.

"In view of these developments, housing market conditions are expected to improve further in 2010, but it is set to be a gradual process with nominal price growth forecast to remain in single digits over the next 12 months," he said.

12/14/2009 8:29:24 AM