[As I’ve been saying for quite some time – the house price boom is pretty much over. It will be interesting to see what happens as Mbekinomics takes full effect and we get hit with Interest rate hikes or Inflation and a crumbling Rand. Some interesting stuff lies ahead.

Lucky for me, my little house falls into the real bottom end of the market, and I see there is still a bit of growth left there. But even that will be drying up.

So my advice to people is: Pay off as much of your debt as you can folks and try to curb your spending. Buckle down now, tighten your belts and slowly prepare yourself for the crunchtime which is coming. There are plenty of people (many of them BLACKS!!!) who are going to hit the wall at full speed. I want to see how our banking system holds up. It promises to be very interesting. Jan]

HOUSE price growth was only 2,9% higher in September than it was a year earlier, the lowest rate of growth since December 2002, according to Standard Bank’s latest residential property gauge.

Senior economist Elna Moolman said this was in line with the bank’s expectations that price growth would “decelerate towards zero by the end of the year”.

Among the factors contributing to the slowdown were that consumers were faced with increasingly expensive debt, high petrol and rising food prices, and generally higher inflation.

“And all that while we have a record low savings rate. We don’t have a buffer against all these adverse developments, so that explains why owner-occupier demand for property is slowing. And investor demand for property is also slowing because of the lower yields in property,” said Moolman.

She said once house price growth had slowed to zero by the end of the year, it would remain “flat” for most of next year until people’s incomes had risen enough to absorb all the “negative impacts they are faced with now”.

Pace Property Group MD David Green said while what Standard Bank was saying was true, there had been expectations of a slowdown in the residential market, in any event. “After a few years of unprecedented price increases, values had to plateau and this has occurred. From here on we are likely to see marginal or no growth at all in the luxury residential market, which includes properties priced above R1,5m,” said Green.

But he said as far as lower-priced properties were concerned, particularly those between R350000 and R600000, the market was still experiencing “considerable demand”.

Green forecast annual price growth of 7,5%-10% a year in this category.

Meanwhile, the latest report issued by property economists Rode & Associates said that while house price growth in general continued to decline during the second quarter of this year, the lower-priced section of the residential market was growing at a faster rate than the middle- and upper-priced sectors.

“This can be ascribed to the fact that house price growth has exceeded disposable income growth for a number of years, forcing many buyers to scale down,” said CEO Erwin Rode.

Rode said the lower-priced market included units priced between R500000 and R700000, while the middle market included properties above R750000, and the upper end included properties priced at R1,2m and above.

Source: AllAfrica.Com
URL: http://allafrica.com/stories/200610030325.htm…/p>