Housing affordability slows

House price growth continued to increase in the second quarter of 2012 showing a year-on-year (y/y) increase of 8.6% from the year-on-year jump of 7.7% in the first quarter‚ according to a report by First National Bank (FNB).

The 2012 FNB Segment House Price Review also suggested that housing affordability‚ which has been improving since 2009‚ was slowing due to stagnant average wage growth and that there seemed to be no sign of a further interest rate reduction since the last in November 2010.
The report showed that home affordability‚ from a price relative to average employee remuneration perspective‚ displayed a major improvement in the average income earner from the second quarter of 2008 until the end of 2010.

The report explained that this was due to the combination of average wage growth outstripping growth in house prices‚ and‚ of course‚ for those utilising credit there was a major drop in interest rates over much of that period.

It added that there still existed a significant financial pressure on households‚ as indicated by the FNB Estate Agent Survey‚ where the sample of agents estimated that 20% of home sellers were selling in order to downscale due to financial pressure.


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