Last year was a poor one for the property sector, with new data released yesterday showing that year on year house price growth has steadily tanked over the past seven months with slowing activity in the residential sector.
The FNB House Price Index for 2016 as a whole averaged only 5% growth on 2015. FNB said this represented the second consecutive year of slowing average house price growth, from a multiyear high of 7.2% and 6.5% for 2014 and 2015 respectively.
The real house price decline last year came as no surprise, with a slowing housing market being the result of a broad decline in economic growth since around 2012 and two years of mild interest rate hikes from early 2014 to early 2016.
FNB household and property sector strategist John Loos said the slowdown showed the lagged impact of residential demand that has been slowing for some time.
“Examining the monthly statistics, the index for December 2016 saw its year on year growth rate reach a lowly 1.3% from a November rate of 1.9%.
This represents the eighth consecutive month of slowing year on year price growth, and is the slowest year on year rate of increase since 2011,” Loos said. He said when adjusted for consumer price inflation (CPI), based on the first 11 months of 2016 (December CPI data is not yet available), it would appear that last year experienced a small “correction” in average house prices with a 1.2% real decline.
He said last year represented the second consecutive year of annual average slowing in house price growth and by the end of the year the monthly price growth figures had become weak.
Samuel Seeff, chairperson of the Seeff Property group, said: “Slower sales, stalling house prices, rising consumer debt and affordability challenges will dominate the housing market in 2017.”
But he said he was keeping his outlook for the market into the early part of next year as stable. “This year the market has shifted from a sellers to a buyers market.
Price growth has dropped notably, save for the Cape which has remained the star performer, but even there, the market and prices are now slowing,” he said.
“We expect 2017 to be a challenging year with an underlying current of drastic fiscal consolidation, rising taxes and costs, higher inflation and growing pressure on home owners and buyers.”
Eloisé de Stefanis, a Gauteng regional manager for Seeff, said the impact of a slower economy took its toll, demand for rental properties in Gauteng increased during the last quarter.
She said that the high cost of living and job losses could have contributed to consumers looking for cheaper accommodation and opting to rent rather than buy.
SAMUEL MUNGADZE |firstname.lastname@example.org