Year-on-year growth in the average value of homes in some categories of housing in the middle segment of the South African residential property market appears to have reached an upper turning point. As expected for some time, base effects and slowing monthly price growth since mid-2012 have caused year-on-year price growth to start moderating.
These price trends are according to the Absa house price indices, which are based on applications for mortgage finance received and approved by the bank in respect of middle-segment small, medium-sized and large homes.
The average nominal value of homes in each of the three middle-segment categories was as follows in March 2013:
Small homes (80m² to 140m²): R752 600
Medium-sized homes (141m² to 220m²): R1 079 500
Large homes (221m² to 400m²): R1 609 600
Headline consumer price inflation is driven by inflationary pressures coming from rising fuel prices and a weaker rand exchange rate since the beginning of the year, and is forecast by the South African Reserve Bank to average 6.3% year-on-year in the third quarter of 2013 before slowing down gradually to just more than 5% in the fourth quarter of 2014.
