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Better times ahead for property market

By unknown | Jan 12, 2010 | COMMENTS [ 0 ]

THERE was good and bad news for house prices, FNB said yesterday when it released its house price index.

THERE was good and bad news for house prices, FNB said yesterday when it released its house price index.

The average house price for 2009 declined by -3,9percent for the year, when compared to the average price for 2008.

However, the good news was that late in 2009 the index showed an improvement, with December 2009 showing a further rise in year-on-year house price inflation to a record 2,7percent.

"While still nothing to be over-excited about yet, the trend points towards a significantly better 2010 for the residential property market, and an 8percent average house price inflation is projected for the year," FNB's property strategist John Loos said.

On a cumulative basis, the index was 195,4percent higher than the July 2000 level, the point at which the FNB house price index started at a level of 100.

The average house value for December was at R772974.

"December was the second month of year-on-year increase in house prices after almost a year of decline.

"The trend bodes well for a better 2010 after the market hit rock bottom in the first half of 2009, and thereafter began to show improvement," Loos said.

South Africa's economy had started to emerge from the recession, "which should provide some mild additional support to residential property demand".

Loos said the full positive impact of last year's five percentage points' worth of interest rate cuts probably still needed to feed through into the market at least for the first half of 2010.

"As such, it is realistic to expect a significantly better residential property price performance for 2010 as a whole," he said.

Loos said the World Cup would be "fantastic for South Africa and its economy in the longer term ... and thus ultimately positive for property performance". - Sapa


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