House prices take a tumble as inflation, interest rise
House prices continued to tumble last month on the back of rising inflation and interest rates growing by only 0,1percent month-on-month down from 1,1percent in June - and reaching a nine-year low.
According to the July Absa House Price Index released yesterday, in real terms (after adjustment for inflation), prices dropped for the fifth consecutive month by 7,3percent year-on-year in June.
Jacques du Toit, senior property analyst at Absa Home Loans, said nominal price growth in the middle segment of the market only posted a 3,2percent year-on-year growth last month.
"The July growth rate was the lowest since September 1999 and brought the average nominal price of a house in this segment of the market to about R967600," said Du Toit.
He said the slow growth was the result of deteriorating market conditions on the back of rising inflation and interest rates adversely affecting household finances.
In the small houses category, nominal price growth slowed to a level of 4,9percent year-on-year last month compared with a growth rate of 6,1percent year-on-year in June last year - bringing the average nominal price to about R680800.
He said economic conditions were expected to improve in the second half of next year.