South African house price growth in most segments and geographical regions of the residential property market slowed down further in the second quarter of 2008, according to Absa’s latest quarterly Housing Review released today.
“This,” the banks says in its extensive report, “was mainly the result of deteriorating market conditions on the back of rising inflation and interest rates, eroding consumers’ spending power.”
“The cumulative 500 basis points worth of interest rate hikes since mid-2006 have caused mortgage repayments in general to rise by a total of 35,6% over this two year period.
These factors, together with significantly lower growth in real household disposable income up to the first quarter of 2008 and the impact of the National Credit Act, have contributed to housing becoming less affordable in recent times. These developments have affected demand and supply conditions in the housing market, leading to markedly lower, although still positive, nominal house price growth in general, whereas in real terms, prices are declining.