Nominal and real house price growth slowed down further in the first quarter of 2008, largely as a result of the tightening of monetary policy, stricter requirements for credit extension, and housing having become less affordable, according to the latest Absa housing review.
The average nominal price of affordable housing increased by 13.8% year-on-year (y/y) to 277 000 rand on average in the first quarter of 2008 (18.2% y/y in the preceding quarter). Real price growth came to 3.5% y/y in the first quarter of the year, down from 9,0% y/y in the fourth quarter of last year.
Nominal price growth of 9.5% y/y was recorded in middle-segment housing in the first quarter of 2008 (12,4% y/y in the fourth quarter of 2007), causing the average price of a house in this market segment to come to about 976,000 rand. In real terms, prices dropped by 0,3% y/y in the first quarter of 2008 (+3.7% y/y in the final quarter of 2007).
In the luxury segment of the market, house prices increased by a nominal 6.7% y/y to about 4.2 million rand in the first quarter of 2008 (7.6% y/y in the preceding quarter). The average price of houses in this category dropped by a real 2.9% y/y in the first quarter, compared with a decline of 0.8% y/y recorded in the fourth quarter of 2007.
At a provincial level, nominal year-on-year house price growth in the middle segment of the market varied between 17.4% y/y and 0.6% y/y in the first quarter of 2008. In the country's major metropolitan areas, nominal growth in house prices of between 19.4% y/y and 1.0% y/y was recorded in the first quarter of the year.Nominal growth in house prices along the coast varied between 21.6% y/y and 9.6% y/y in the first quarter of 2008.