Absa - Building costs and new and existing house price trend.

The cost of building a new house according to Absa increased by a nominal 10,6% y/y in the first quarter of 2007, compared with a growth rate of 11,1% y/y in the preceding quarter. Building costs continued to increase at rates well above inflation, driven by factors such as the strong demand for building materials and skilled labour caused by high levels of activity in the building and construction sector.

The average price of a new house increased by a nominal 16,0% y/y to about R910 300 in the first quarter of 2007, which implied an increase of 9,5% y/y in real terms. The average price of an existing house increased by a nominal5,3% y/y to about R888 500 in the first quarter, which brought the real price increase to 8,9% y/y.

The nominal price difference between new and existing houses was 2,3%, or about R21 800, during the first quarter of 2007. The price difference between new and existing houses levelled out during the past twelve months after a sharply declining trend since mid-2003. In that year, it reached an all-time high of R175 100, or 31,4%.
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