House price decline diminishes

FNB expects year-on-year house price increases to resume in the next few months after data released yesterday showed its House Price Index continued to diminish at a steady pace.

FNB's market share of new business is about 15,5percent, Absa has 28,9percent and Standard Bank about 15percent.

FNB said the recent months' diminishing price deflation was the start of a trend back towards price inflation, following an improving trend in demand and transaction volumes that started at the beginning of the year.

Interest rate cuts have improved households' ability to service debt, though there has been no real help from the economy, which until very recently remained in recession, said FNB property analyst Ewald Kellerman.

The bank has also seen an improvement in credit quality.

Home loan arrears numbers are improving, while second quarter insolvencies at the bank were down by 40percent year-on-year.

Standard Bank meanwhile said its September data showed a contraction of 5,2percent year-on-year for house prices, the same decline as in August.

This brings the number of monthly declines to 16 consecutive months.