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Property market ‘in for another tough year’

Property market ‘in for another tough year’ - property market - South Africa

HE property market can expect another tough year with economic indicators painting a grim picture. According to First National Bank (FNB) figures for last month, released on Monday, the bank’s valuers anticipate more hard work for the sector, with weak demand for houses relative to supply.

FNB property strategist John Loos said yesterday that the bank’s house price index for last month completed the picture for last year, "a year which proved to be hard work for those in the property industry, although it was significantly better than 2009".

The year-on-year rate of increase in the FNB house price index for last month was 3,6%, unchanged from the November revised growth rate .

In real terms — adjusting for a November consumer price inflation rate of 3,6% year on year — this means that house prices did not change in November.

"Examining last year as a whole, though, the picture was better than what the weak year-end figures suggest. The average price level was estimated to be 6,7% higher than the 2009 average price level, which translates into a real price average that was 2,3% higher last year than in 2009, when taking the first 11 months of last year into account."

It was too early to say whether the stabilisation in the rate of price increase was any sign of a turnaround in the price trend, Mr Loos said, but at this stage, "I think probably not".


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