Prices decline nine months in a row

2011-07-05 00:00

THE wealth of the household sector in South Africa eroded further in June 2011 as house prices continued to decline in real terms.

FNB’s House Price Index for June shows prices declined by some 2,5% in real terms — the ninth consecutive month of decline. The index recorded 2,6% year-on-year growth in nominal prices compared with 1,8% nominal growth in house prices in May.

The average house price as at June 2011 was R805 759.

A property analyst at FNB home loans, Ewald Kellerman, told The Witness yesterday that demand activity, as measured by estate agents and valuers, remains relatively low and the sector remains relatively highly indebted.

Many economists expect the SA Reserve Bank to announce the first interest rate hike in the next rate-hiking cycle in the first quarter of 2012, on concerns over rising consumer inflation.

The bank’s target range for the Consumer Price Index (CPI) is three to six percent. The CPI, which came in at 4,6% in May 2011, has been steadily on the increase.

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