House prices rise to 8% - FNB House Price Index

03-03-2014
Read : 95 times
Moneyweb
Source

Market strengthening, average house price inflation seen slowing.

The average house price for February accelerated to 8% year-on-year, from a revised 8.2% rate in previous month, according to the FNB House Price Index.

Average house prices for February came in slightly higher than an unrevised 7.9% for January.

The index, which tracks the property market, indicated that real house price growth grew 2.33% year-on-year in January (adjusted for consumer price inflation (CPI)). February’s real growth figures and CPI are still expected.

Real house price has been in decline since December which came in at 2.83%, a trend attributed to the rise in CPI from December’s 5.4% to 5.8%.

The index also indicates that the average price of homes transacted was R935 332, up from January’s R924 261.

Despite the slowdown in the average house price, the index said an 8% rate for February remains a number reflective of a solid market.

The Reserve Bank in January raised the repo rate by 50 basis points, a move that many said would negatively impact the property market. The index noted that it is too early for the February figures to reflect the bank’s decision.

FNB expects interest rates to rise towards the end of the year “further to where Prime Rate ends 2014 at 10%”.

“We would expect the pace of market strengthening to slow in the coming months, resulting in further mild slowing in average house price inflation as the year progresses,” the index explained.

The decline in price growth is expected to be 5-6% by year-end, slightly below CPI inflation which is expected to end the year just above 6%.

There is some respite for the housing market as the combination of a 8% house price growth and a slightly higher 9% Prime Rate, “should continue to keep the market by-and-large healthy”.