Homeowners who have held onto their homes for the past 17 years will be happy to learn that, on average, their homes have appreciated by 319.9% in nominal terms (not adjusting for inflation).
When inflation is considered, growth is a pretty 63.5% above the end-2000 level.
This is according to data released by FNB which noted that recent months’ home price deceleration trends have turned somewhat, with the bank’s index showing a year-on-year growth rate for April 2017 of 5.5%, from March’s 4.1%.
“However, in real terms, when adjusting for CPI (Consumer Price Index) inflation, the year-on-year rate of house price change remains in negative territory, having recorded a -1.9% year-on-year decline in March,” said John Loos, FNB’s household sector strategist. “This is the result of a combination of +4.1% average house price inflation and +6.1% CPI inflation in March (April CPI data not yet available).”
But the writing on the wall suggests that recent political instability and policy changes could scupper any and all gains, with industry players expecting interest rate hikes in response to recent credit rating downgrades.
The average price of homes transacted in April was R1,117,338 – -21.3% below the all-time high reached in December 2007.
While homeowners can’t always be blamed for taking short-term views on house price movements, it is reassuring to note that there is value in homeownership.
Interestingly, RE/MAX of Southern Africa noted that, according to deeds office data, 35,088 bonds were registered from January to March this year, with the average bond amount at around R1,027,000; during this same period 45,552 bonds were cancelled.
This could indicate that homeowners are paying up their bonds, selling to buy, or selling to rent.