Credit Act could break down house prices

Business Report
August 7, 2007
By Tiisetso Motsoeneng
Johannesburg - A nominal house price growth of 14.5 percent year-on-year (y/y) was recorded in July in the middle segment of the market from 14.9 percent in June, according the latest Absa House Price Index. The growth brought the average house price to about R932 100. During the first seven months of the year, average nominal house price growth of 15.4 percent was recorded compared with the same period last year.
The research showed that on a month-on-month (m/m) basis, nominal house price growth slowed further to 0.5 percent in July from 0.7 percent in June - the slowest nominal month-on-month growth since September 1999 when it was 0.4 percent. In real terms, house prices declined by 0.1 percent in June. The real rate of prices remained largely unchanged since March this year.
The researchers said that they expected further moderation in the remaining months of the year due mainly to higher interest rates. "It still has to be seen to what extent the National Credit Act will influence price growth, if at all," the researchers said. The Absa House Price Index is based on the total purchase price of houses in the 80m²-400m² size category, valued at R2.7 million or less (including improvements), in respect of which loan applications were approved by Absa. - I-Net Bridge