The slowing economy is starting to bite into the residential property market, with sales and transfers dropping 7.1% in the third quarter of 2015 compared to the previous quarter.
This is according to data from estate agency HomeBid, which tracked 71,101 transfers in the various deeds offices around South Africa for the third quarter of this year.
The second quarter reflected 76,546 transfers.
“The good news is that average price levels countrywide have risen 1.3% for the quarter, which equates to an annualized 5.2% p.a increase in average home prices,” said HomeBid adviser, property economist Neville Berkowitz.
The average home sold and transferred is now R1,188,243, he said.
HomeBid said that 87% of all homes sold and transferred in the third quarter were through the four major deeds offices of Johannesburg, Pretoria, Cape Town and Pietermaritzburg – the latter being mainly greater Durban regional sales.
Slow growth in home value
Meanwhile, data from the Absa House Price Idex shows that small, medium and large homes in the country have shown low growth in value in 2015.
As it stands at September 2015, the average value of a small home (80-140sqm) is R884,000, with medium homes (141-220sqm) at R1.23 million and large homes (221-400sqm) at R1.96 million.
According to Absa, in nominal terms, growth in value has remained low across all home categories – while in real terms (taking consumer price inflation into account), the value of medium homes has decreased.
This is due mainly to a tough economic environment, compounded by higher interest rates and lower consumer confidence.
“Consumers are set to continue to experience financial strain over the next 12-18 months on the back of low economic and employment growth, inflationary pressures, and rising interest rates,” said Absa.
Nominal house price growth is forecast to remain in single digits in 2015 and 2016, with real price growth set to be under pressure for the rest of the year and during next year, in view of inflation expected to average near the 6% level during this period, said Absa.