value of houses falling
There is no good news for homeowners desperate to sell their houses as the latest house price survey shows a dip that has not been seen since 1999.
Furthermore, if you have put your house up for sale, you can expect to get as much as 40percent less than your initial asking price by the end of this year.
Absa Bank's House Price Index for May released yesterday recorded single digit year-on-year nominal growth of 4,3percent last month, down 1,2percent from 5,5percent in April - the slowest house price growth in nine years.
The average price of a middle segment house dipped to about R960700 in May, from the average of R974000 in April.
The Absa index is based on the total purchase price of houses in the 80 metre square to 400 metre square size category, valued at R2,9million or less in 2007.
The bank expects the Reserve Bank's Monetary Policy Committee to introduce a 100 basis interest rate next week, with potentially further rate hikes if the CPIX (inflation excluding mortgage costs) remains "stubbornly high".
Absa senior property analyst Jacques du Toit said there were more people selling their homes than there were buyers as negative economic conditions started to show their effects on people's affordability levels.
"We anticipate, and expect property repossessions to pick up, but coming from a low base. The repossessions would not be isolated to a particular market segment, it would affect virtually all segments of the residential property market.
"The increase of stock in the market is a reflection of the financial difficulties that people are going through," Du Toit said.
Lew Geffen, the head of Lew Geffen Sotheby's International Realty, said in a letter to his agents this week that he had advised a relative to drop his price by 25percent to get a quick sale, and advised agents to tell their clients to do the same.
He said: "It's a question of being truthful to your clients to save them severe pain by procrastinating and not accepting the offer today. Today's low offer is tomorrow's miracle price. This market is not going to recover any time soon." - With Simpiwe Piliso