Property Reporter
SA’s residential property put in its worst performance in 12 years last year, Standard Bank said yesterday.
The bank’s median house price index recorded a decrease of 3,1% year on year last month, bringing the average annual decrease last year to 0,3%.
The median house price was R592000. The bank warned that the data “reflected a very fragile property market ”.
Johan Botha, economist at Standard Bank home loans, said conditions in the market were tough and the economy had yet to bottom out.
He said consumers were going to sit tight and reduce their debt this year, and sentiment would probably change during the fourth quarter of the year as inflation and interest rates declined.
Standard Bank said thee were two factors that were responsible for the volatile data seen last year.
Firstly, the National Credit Act, which was introduced in 2007, began affecting data last year when strong declines in growth were reported.
Secondly, late last year distribution of property prices changed when a decline in the number of middle- and lower-priced properties processed was reported and so the data reflected more sales of higher-priced properties resulting in an increase in a higher median price for December.
According to the bank, the peak of the residential median property prices was reached in October 2004. The housing market had been “in the doldrums” since mid-2006 when interest rates began to rise.
Since June 2006, the benchmark interest rate rose by 500 basis points and the Reserve Bank cut the repo rate at the end of last year by 50 basis points.
Standard Bank said the interest rate increases placed huge stress on the economy in general and household affordability especially.
The report said the combinations of reduced affordability of housing and the implementation of the National Credit Act resulted in the demand for residential property declining.
The b ank also noted that the number of mortgage loan applications declined in November and last month compared to October. With Sapa
