Absa House Price Index – May 2011
Absa – South Africa
Home values continued to decline in May
The year-on-year growth in home values in the small, medium-sized and large categories of housing in South Africa for which Absa approved mortgage finance (see explanatory notes) remained under pressure in May 2011.
In the first five months of the year, house prices showed an average nominal decline in the small and medium-sized categories, while all three segments recorded real price declines up to April. The declining trend in real home values over the past few months is related to the slower nominal price growth, while the consumer price inflation rate has risen gradually during this period to a level of 4,2% in April.
In the category of small houses (80m²-141m²), prices dropped by a nominal 6,4% y/y in May this year (-4,7% y/y in April). The base effect of a strong upward trend in price growth in this segment of the market a year ago is having a significant impact on current year-on-year price growth. The average price of a small house came to about R755 400 in May. A real price decline of 8,6% y/y was recorded in the small-house category in April.
The average value of medium-sized homes (141m²-220m²) declined by 1,8% y/y in May 2011, after being 1,7% y/y lower in April. The price of a medium-sized house was around R955 500 in May this year. In real terms, home values in the medium-sized segment dropped by 5,7% y/y in April 2011.
The segment for large houses (221m²-400m²) saw nominal price growth of 1,8% y/y in May, down from 2% y/y in April. The average price of a large house came to R1 487 700 in May. A real price decline of 2,1% y/y occurred in the large segment in April.
Absa House Price Index
Start small and pay less
RealEstateWeb – South Africa
The best place to start is to buy small and then build up to your dream home.
Most people who are shopping for a home have something specific in mind, but often what they can afford to buy doesn't match the mental picture.
When looking around for a home these days, buyers often have to make some kind of compromise between price and the home's features. We would all love to be able to buy our dream home, or even build it from scratch so that it suits our requirements perfectly. However, many are not in the financial position to do this.
Bearing the current mortgage market conditions and affordability factors in mind, coupled with the fact that the interest rates are set to increase this year, possibly even sooner than many think, the best place to start is to buy small and then build up to your dream home.
While now is a good time for buyers to get into the property market, they have to be realistic about what their money can buy. Although first time buyers may not be able to start out in their dream home, they can still enjoy the benefits of homeownership in a more affordable starter home.
Pam Golding – South Africa
In a sad reflection of what one might ascribe to natural selection, the real estate industry has trimmed down to less than half its size, in numbers of agents and agencies, since the beginning of the residential property slump.
More than 60% of agents active in the industry in 2007/2008 have left. Depending on which statistics you accept, there are around 25 000 currently in the field – down from 80 000 at the industry’s peak.
Hand in hand with this attrition, however, has evolved a more professional and ethical framework, as the efforts of the State regulator, the Estate Agency Affairs Board, and the industry participants to improve standards and impose stricter controls, have borne fruit.
Pam Golding IP
New curbs for foreign land ownership
Business Day – South Africa
The government is soldiering on with plans to restrict foreign land ownership in SA and to prescribe conditions for land use, Rural Development and Land Reform Minister Gugile Nkwinti said yesterday.
Rather than preventing foreigners from owning land, a policy on "precarious tenure" for land ownership by foreign nationals would be developed "to determine the basis on which foreigners can lease or utilise land", he said.
Tabling his budget vote in Parliament , Mr Nkwinti said the Land Protection Bill would be submitted to the Cabinet this year.