Average house price growth is -1.1% compared with August last year. This is according to the FNB House Price Index for September 2016 which recorded year-on-year inflation of 3.4% (before adjusting for inflation) – slower than the revised 4.8% rate recorded for August.
“In real terms, when adjusting for CPI (Consumer Price Index) inflation, the rate of house price growth has recently turned negative, having recorded a -1.1% year-on-year decline in August, a weakening on the revised -0.3% decline in July,” said Tommy Nel, head of credit at FNB Home Loans. “This real price decline was largely due to the slowing nominal house price inflation rate, while CPI inflation has also been slowing but by a far more gradual rate.”
Nel attributed slowing house price inflation to supply not meeting demand, as well as a rise in the estimated average time of properties on the market prior to sale recorded by the FNB Estate Agent Survey.
“From 11 weeks and 1 day estimated average time on the market in Q1 2016, the agents have recorded a rise to an average of 14 weeks on the market in the Q3 survey,” said Nel. “The market thus appears to be slowly drifting away from ‘equilibrium’.”
FNB recorded the average price of homes transacted in June to be R1,056,774.