FNB HOUSE PRICE INDEX: Feb 2010
Property prices and property values are continuing to increase. That’s according to the FNB House Price Index for February 2010. In his report, John Loos of FNB Home Loans, highlights that the value your home has grown by 5.8% from Feb 2009 to Feb 2008. This growth rate is much better than January’s figures of 3.6% year-on-year growth. But they’re still lower than inflation, which is currently above 6%.
Loos predicts that property owners are about 2 or 3 months away from enjoying house price growth of great than 6%, and he expects that for 2010 property values could grow by about 8%.
Interest Rate Cuts Driving The Recovery
While these are encouraging signs he points out that this excellent recovery in the property market has been driven by interest rates, rather than strong economic conditions.
A 5% interest rate cut between June 2008 and August 2009, as well as banks easing their leading criteria have been labeled as the major factors driving this recovery.
The overall picture of the housing market looks good, but it could come under pressure once again if the recent hike is energy costs have a very negative effect on disposable income levels.
Double Digit Growth by 2012
Despite this, we could see 10% or more growth in property values by 2012, by which time household debt levels would have dropped and employment levels would have improved, adding to a healthier economic growth rate