The growth of house prices is slowing. According to the ABSA House Price Index the rate of growth in property prices drop from 15.2% in January to 14.5% in February 2006.
ABSA attributes the drop to property price growth to the fact that over the past few years homes have become less affordable.
A combination of sharp property price increase and small wage increases have contributed to the fact that fewer people are able to afford to buy new homes.
The Finance Minister, Trevor Manuel, has addressed this issue though, announcing in he latest budget speech that property transfer costs would be dramatically reduced. As from March 1, 2006 properties under R500 000 will be completely exempt from transfer duties.
The move to increase the affordability of homes is expected to boost the property market.