Home Loans

Property News: FNB House Price Index for March 2010

Now is the time to get into the property market, or to invest further into residential property if you already own a home. Besides being a basic need, property values are growing fast and the pace is expected to increase even further!

Data from the lastest FNB House Price Index shows that property prices in South Africa are increasing steadily. According John Loos,FNB Home Loans strategist, the property values grew by 8.6% in one year. That’s the average growth rate in South Africa from March 2009 to March 2010.
The price of an average home in South Africa is now just under R780 000. And, the fact that in 2005 the average house price was only about R260 000, further illustrates why I still to believe that property is one of the best investments available.

A number of factors are contributing to the strong growth in property market, among them are:

• A very low Prime Interest Rate – the South African Reserve Bank has cut interest rates by 5.5% since 2008. And, rates are expected to say relatively low well into 2011.
• Renewed economic growth – As economic conditions improve, the supply of jobs has also improve in recent times.
• And, strong consumer confidence – Although most household still have very high amounts of debt, the cost of servicing this debt has dropped off significantly.

One other point highlighted by FNB in their House Price Index was the fact that homeownership is becoming less affordable. This means that although the avergage income for most South Africans is increasing, property prices are growth faster! Therefore, unless you are planning a big change in your personal finance status it is best to get into the property market as soon as possible.

But, here is an important note for first time buyers that I shared in a previously – Act quickly but don’t rush!
Related: Home Loans For First Time Buyers

Outlook for Property in 2010

Going forward, FNB expects house prices to grow by about 8% for the rest of the year. This is some what better than ABSA’s forecast of 6%. While Standard Bank, who uses a slightly different method to track property prices, believes that prices will increase by between 5%-10% in 2010.