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 Rating agencies may come knocking

It is only the middle of February, but the rand has already made two big moves. The first was the rand moving from R14.60 to R 13.20 at the beginning of the year, as emerging markets (EM) became fashionable again. The second was where the rand gave away nearly 90 cents in 2 weeks as the EM rally ran out of steam, and local events started to hit the headlines.

Read more

The cost of sending money home to neighbouring countries

Transferring money home within the Southern African Development Community (SADC) provides vital financial support for many households in neighbouring countries.

Read more

Student bank accounts: Which come out on top?

Being a student signals budgeting and not having a lot of money at your disposal. This means streamlining expenses such as your grocery costs and entertainment budget. But what if your bank account is in fact costing you more than you can afford?

Read more

Can you afford an ambulance in South Africa?

When a loved one is straddling the line between life and death, you won’t hesitate to call an ambulance. This week, Justmoney found out how much an ambulance ride costs in South Africa, whether you can refuse to get into an ambulance, and who pays the bill if you’re unconscious. 

Read more

Sign Up

To our weekly newsletter for advice you can bank on

Deals

President Hotel Easter Special

Price: From R1,500
When: 15 March to 30 April
Where: Cape Town

Kulula-Preskil Island Resort Special

Price: R16,999
When: 11 May -14 September
Where: Mauritius

A Touch Of Madness Tuck In Tuesday Special

Price: R70
When: Tuesdays
Where: Cape Town