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National House Price Growth Declines

9 Apr 2018

On Wednesday, 3 April 2018, FNB revealed in its House Price Index that the national house price growth rate has slowed to 2.6 percent in February 2018, and a further 1% in March 2018 year-on-year, a significant decline from 5 percent in November 2017.
Household and property sector strategist, John Loos, believes that the Western Cape’s slowdown from 10.9 percent in the second quarter of 2016 to 1.5 percent in the first quarter of this year massively impacted the national average.
“Not long ago, [the Western Cape’s] relatively strong house price growth was a boost to the national average price growth. Of late, however, its rate has become ‘pedestrian’ like the rest”, says Loos.
The slowdown in the Western Cape is contrary to the expected strengthening of the housing market in Gauteng.
"We have been more upbeat about housing market strength to come in Gauteng, the country's largest market, but as yet have not seen this translate into any house price growth acceleration," he said.
According to FNB, Gauteng’s house price index still showed slow year-on-year growth of 1.4 percent in the first quarter of this year.
Loos believes that the Western Cape’s severe drought may have played a ‘cooling’ role on its economy as well as on its housing market.
Although national sentiment and economic conditions have improved, Loos believes that it may still be some time before house price growth keeps up. “We remain of the belief that such a national market strengthening - albeit a mild one - will still materialise in 2018, but there can be a lag time between when residential demand starts to pick up until when year-on-year house price growth starts to strengthen, and that lag is perhaps what we are still seeing in the 1st quarter of 2018.”

Source: Businesstech and Property24