Rates knock down house price growth
February 1, 2008
Johannesburg - Growth in house prices as measured by the Lightstone National House Price Index have continued on a declining path, reaching 13.2 percent in September 2007, down from a year-on-year inflation rate of 17.0 percent in September 2006.
On a month-to-month basis, the inflation rate has remained relatively constant from the previous month (August 2007) at 1.0 percent.
Lightstone said the September inflation numbers are starting to show the effects of the August interest rate hikes, along with the impact of the National Credit Act implementation in June.
It is expected that the two further interest rate hikes in October and December will have a further negative impact on the inflation numbers in the following months and well into 2008.
The index uses advanced statistical methods that include data from the Deeds Office and the Surveyor General.
"It is the mid to lower end of the market that is continuing its strong run, albeit also on a weakening trend, and its superior price inflation is having a positive effect on the national index," said Andrew Watt, Lightstone's business development director.
Coastal provinces continue to be a mild drag on the index compared with the smaller inland provinces, which have continued with their positive run, he added.
The declining inflation trend, which started back in July 2004, is expected to continue well into 2008. However, recovery is expected in the latter part of 2008, with interest rates expected to reach their peak before mid-2008, Watt said.
He added that negative effects of some of the policy issues, including the NCA, and the lack of transfer duty and personal tax relief in 2007 following a major tax stimulus in 2006, were expected to wear off.
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