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South Africa’s house price growth down 22% in 10 years

33aerodrome-36Average house prices between December 2015 and the end of 2016 declined -4.7% in real terms (when adjusted for inflation); going back 10 years to the end of 2007 – the boom time real house price high point – real house prices are -22.2% down.

This is according to FNB’s household and property sector strategist, John Loos, who said the FNB House Price Index for 2016 as a whole rose by 5% – slower than the 7.2% and 6.5% for 2014 and 2015, respectively.

“Examining monthly figures, the rate of house price inflation had slowed to a lowly 1.6% year-on-year by December 2016,” said Loos, noting that there were signs of a mildly improving economy to come in 2017. “We do expect economic growth to move slightly higher to around 1% this year. That could conceivably take house price growth a little stronger later on in 2017. However, for 2017 as a whole we still anticipate average house price growth to be slower than 2016, at around 3%, due to a very weak start to the year.”

Is everyone except the Cape growing negatively?

According to Loos, in real terms based on the first 11 months of 2016 (December CPI data was not yet available), 2016 experienced a small “correction” in average house prices to the tune of -1.2% real decline.

“The 2016 annual average price growth rate of 5%, however, was largely due to better growth in the early stages of 2016, with the latter half showing a steady slide,” said Loos, noting the monthly statistics where the FNB House Price Index for December 2016 saw its year-on-year growth rate reach a lowly 1.3%, from a November rate of 1.9%. “This represents the eighth consecutive month of slowing year-on-year price growth, and is the slowest year-on-year rate of increase since May 2011.

“What is also noticeable in these past eight months is that the pace of slowdown in growth has been noticeably more rapid than any slowing growth phase of the past five years or so, and the rate ended the year sharply lower than the 2016 high of 6.9% in April.”

December’s average estimated house price was R1,055,210.


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