Guiding consumers since 2009

New houses are cheaper, says Absa

By Staff Writer


From Business Report
November 15 2007
By Roy Cokayne

A new house was 1.9 percent cheaper than an existing house in the third quarter of this year, according to the latest Absa quarterly residential property perspective. Absa’s average price of an existing house is R950 900, compared with R932 900 for a new house.

“This development may be a reflection of tightening market conditions with regard to new housing and is related to … trends in building costs and competition in the house building sector,” it said.

The report said the cost of building a new house increased by 9.8 percent year on year in the third quarter, from 11.9 percent in the second quarter.

The lower growth rate in building costs in the third quarter could probably be ascribed to the recent softening in the housing market, Absa said, resulting
in fiercer competition among developers and contractors.

Remuneration data for the first quarter of this year, the most recent available data, showed that the ratio of house price to remuneration increased further in the quarter.


In addition, the ratio of mortgage repayments to remuneration lifted more quickly since the middle of last year.

Increases in these two affordability ratios implied that house prices and mortgage repayments were rising at a faster rate than remuneration, which meant housing was becoming less affordable, Absa said.

Absa forecast that higher interest rates, together with the possible effect of the National Credit Act on mortgage advances and total credit extension, would have a dampening effect on the residential property market towards the end of this year and into next year.

It forecast house price growth of 14.5 percent for this year and 10 percent for next year, adding that these forecasts reflected the tighter monetary policy conditions, a slower pace of economic expansion, lower growth in real household disposable income and the effect of the National Credit Act.

Recent Articles

Featured How are you taxed on your retrenchment package?

Unemployment is one of the biggest problems in South Africa. The emergence of the Covid-19 pandemic has exacerbated the situation with a lot of companies retrenching their employees.  When retrenched, you’ll receive a retrenchment package, but do you know how much tax you’re liable for?

Car repossessed – don’t be taken for a ride

When the country is facing an economic downturn, chances are your finances will feel the pinch. This can lead you to make bad financial decisions such as skipping your vehicle payments. But every decision has consequences and if you don’t pay your instalment, the bank will repossess your car. But what can you do when this happens?

 

Why you should consider gap cover

Your medical aid should protect you from incurring large medical bills when you’re sick. But what if your plan doesn’t cover the full cost of your medical expenses? We got in touch with insurance experts to find out whether gap cover is worth having.

Debt relief - What is your bank offering?

Going through a financial crisis is stressful whether it be as a result of losing your job, being short-paid, having to fork out towards an emergency payment, or finding yourself in the midst of a global pandemic. This is especially taxing if you have a debt to service. It is against this backdrop that banks are increasingly offering payment holidays. Justmoney looks at the various debt relief options available to you from the big five banks.

Deals

Office furniture at discounted prices at BDK

Price: Available on request
When: Daily
Where: Johannesburg

Da Vincis Happy Hour Special

Price: Available on request
When: Daily
Where: Cape Town

Use your Absa card and get 30% cashback at Dis-chem

Price: Available on request
When: Daily
Where: Nationwide


Latest Guide

Guide to debt rehabilitation solutions