The improvement in house prices is picking up speed, with First National Bank (FNB) reporting its first double-digit price increase since April 2008 earlier this month. According to FNB’s monthly price index, house prices increased by 10,1% year-on-year in April, up from 8,1% in March. Adjusted for consumer inflation, house prices returned to positive year-on-year growth in February this year and grew by 2,8% March, partly thanks to lower inflation figures. If you have a house for sale and have the luxury of time, it may therefore be worthwhile keeping it on the market a while longer. While the recovery has been under way for close to a year and a half (the turn in the market started late in 2008), FNB predicts that growth will peak around mid-year or in the third quarter of 2010. This peak can be either growth in demand or price growth, FNB says. To get an idea of average prices you can achieve for your house for sale, or what you will pay for your next one, FNB’s monthly house price index show average prices of R753 012 for middle income suburbs in the major metros, while the average house in a high income area is currently R1,16 million. A house in an affordable area will cost R377 086 on average, while the average holiday home in a coastal town will set you back R1,02 million. Prices have been recovering in all property sectors except holiday houses, indicating that households are still under too much financial strain to consider these luxuries. If your house for sale is in the smaller and more affordable category, Absa predicts stronger interest from buyers in this segment as households remain under financial pressure. Rising electricity prices, water tariffs and property rates and taxes, affecting the cost of operating a property, may also be a contributing factor to homebuyers looking at more affordable housing, Absa says in its May House Price Index report.
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