House prices grow at a more moderate pace in January

Posted On Monday, 03 February 2014 15:57 Published by eProp Commercial Property News
Rate this item
(0 votes)

House prices grow at a more moderate pace in January, but FNB believes this has nothing to do with January's surprise rate hike.

John Loos





House prices grew at a more moderate pace in January‚ as measured by the First National Bank (FNB) house price index‚ but the bank believes this has nothing to do with January’s surprise rate hike. FNB’s monthly house price index rose to 7.9% year on year in January‚ slightly lower than the revised 8.2% registered in December.

In real terms‚ the house price index remained well above levels of a decade ago‚ up 26.8% from January 2004. FNB said they did not attach much significance to January’s moderation in house prices as the market was still gathering broad momentum.

But last week’s 50 basis points rate hike from 5% to 5.5% had changed the bank’s forecast for the housing market from a “mild strengthening” to a “mild slowdown”.

“Our expectations for further mild improvement in 2014 were based on the all-important assumption that interest rates would not rise until early-2015‚ or perhaps at the earliest very late in 2014‚” FNB property analyst John Loos said. 

“In a highly credit-driven market‚ such as the residential property market‚ an interest-rate ‘surprise’ changes a lot‚” Loos said

The bank said while one lone interest rate hike would not make a big difference to instalment repayments‚ it was expected to have a significant effect on buyer sentiment “because many aspirant buyers will know that interest rate hiking in SA‚ once it starts‚ normally doesn’t stop at one lone hike”.

He said: “No longer do we expect a mild strengthening in 2014 but instead a mild slowdown in the market”. 

Last modified on Friday, 14 March 2014 08:57

Most Popular

Empowering women in engineering through B-BBEE

Jan 13, 2020
Andrew Yorke
Working to embrace the spirit of transformation and developmen.

Cheap cement imports crippling local industry

Jan 16, 2020
Databuild CEO Morag Evans
Local cement manufacturers are being severely undermined by cheap imports from countries…

Repo rate cut by 25 basis points

Jan 16, 2020
The Reserve Bank has reduced the repo rate by 25 basis points to 6.25% in line with…

Property in 2020 - here's what's happening

Jan 16, 2020
Carl Coetzee CEO of BetterBond
With the political, economic and social landscape in South Africa being what it is, i.e.…

The rising tide of the silver economy

Jan 16, 2020
Chris Cilliers
Whilst we may not yet have discovered the long-coveted elixir of eternal youth, the truth…

Please publish modules in offcanvas position.