Drop inthe priceof houses slows down

IF YOUR house was worth R966000 in July last year its value will have shrunk by R40900 a year later.

Absa, the country's biggest mortgage lender, said yesterday that house prices in the middle segment of the market were down by 4,2 percent year-on-year to R925 100 last month, from 4,1 percent year-on-year in June.

This was the lowest level since the second quarter of 2007.

Absa said: "House price deflation appears to be near slowing down on a year-on-year basis, while month-on-month price deflation has already slowed over the past few months."

The banking group expects house price deflation to continue in the second half of the year, "but most probably at a slower pace".

It expects nominal house price deflation of between 3 percent and 3,5 percent for the full year, with real prices set to decline by about 10 percent.

"With South African house prices deflating since late 2008, this trend seems to be near the lower turning point on a year-on-year basis, while month-on-month price deflation has slowed down further in July after bottoming in March this year," said Absa senior property economist Jacques du Toit.

Du Toit said house price growth was expected to be relatively low next year and real prices were set to decline for most of 2010 before turning positive.

The average nominal price of small houses (8mx14m) was 4,8 percent year-on-year lower in July at about R650 900, after declining by 4,7 percent y/y in June.

The average nominal price of medium-sized houses declined by 4,8 percent year-on-year in July to R903 500.