Cracks in house prices to widen
September 5, 2007
By Evan Pickworth
Johannesburg - Jacques du Toit, senior economist at Absa, said that their projections were for nominal house prices to taper off in 2008 to just 10 percent growth as higher interest rates bite.
He added that average growth for 2007 is forecast at 14 percent, which is in line with his forecast in May.
"Nominal house price growth for next year is forecast at about 10 percent, mainly as a result of the upward trend in interest rates since mid-2006, as well as slower economic growth expected in the second half of this year and in 2008," explained Du Toit.
This projected slowdown comes after house prices grew at an astronomical 22.7 percent in 2005.
The declining trend then took route the next year as growth averaged 15.3 percent in 2006. This declining cycle is therefore now likely to extend over a minimum of three years before potentially picking up again.
The current Absa projections come after they recorded August house price growth at a lower 14.6 percent year-on-year from 15.1 percent in July and 15 percent in June.
House price growth in the first half of the year was at 15.5 percent, but a decline took place to 15.4 percent when measured over the first eight months of the year.
Many analysts also point out that the implementation of the National Credit Act may also affect growth in mortgage advances, although it is felt that it is still a little early to tell whether this has impacted prices.
|
|
