|In 2005, the average price of South African houses in the so-called middle segment of the residential property market (houses of 80m²- 400m² and priced at up to R2,2 million) increased by 21,9% year-on-year (y/y) (32,2% in 2004) to about R700 200 in nominal terms, according to Absa in its Residential Property Prospective First Quarter 2006 released this week in Johannesburg.|
In real terms (after adjustment for inflation), house prices increased by 17,9% last year, compared with a growth rate of 30,4% recorded in 2004.
In the fourth quarter of 2005, nominal house prices in the middle segment increased by an average 15,7% y/y to about R733 200. This was the lowest nominal growth in any quarter since the second quarter of 2002, when a growth rate of 14,4% was recorded. In real terms, house price growth came to 11,6% y/y in the final quarter of last year.
In both nominal and real terms the year-on-year growth in house prices, according to the bank, was down on that of the third quarter, when it was respectively 19,7% and 15,2%.
In the three middle-segment categories, house price growth was as follows in 2005:
* Small houses (80m²-140m²): nominal 18,5% and real 14,7% higher.
* Medium houses (141m²-220m²): nominal 23,5% and real 19,5% higher.
* Large houses (221m²-400m²): nominal 24,2% and real 20,1% higher.
The average price of affordable houses (houses of 40m2-79m2 and priced at R193 000 or less) in 2005 increased by 15,1% y/y in nominal terms compared with growth of 19,7% y/y in 2004. In real terms, the bank says, this represents an increase of 11,4% y/y compared with price growth of 18,1% in 2004.
In the final quarter of 2005, nominal house prices in the affordable category increased by 8,6% y/y. The increase in the preceding quarter was 15% y/y. In real terms, house price growth in this category came to 4,7% y/y in the fourth quarter of last year, compared with y/y growth of 10,7% in the third quarter.
House price growth in the affordable market segment continued its downward trend, with both nominal and real year-on-year growth declining further in the fourth quarter of 2005. The affordability of housing probably also had an impact in this market segment during this period.