Average Property Prices Are Still Dropping – FNB

Property News: FNB House Price Index

Although property prices across South Africa remain under pressure, the rate at which house prices are declining is beginning to slow.

In May, property prices dropped by 11.3% year-on-year (May 08 to May 09). The FNB House Price Index now shows that prices have dropped by 10.2% year-on-year (Jun 08 to Jun 09).

The rate at which property prices are declining is expect to gradually slow, and we may see positive growth toward the start of 2010.

The figures also show that on a month-to-month basis (May to Jun) your property value dropped by 2.2%.

FNB property strategist, John Loos, believes the reason for the decline in property prices is primarily due to an oversupply of properties on the market currently.

He adds that interest rate cuts have a marginally positive impact on house prices to date.

Many homeowners are struggling to maintain their loan repayments and are opting to downscale their homes.

FNB concluded their housing report by saying: “The view remains that weak demand and an apparent oversupply of property on the market is expected to translate into national house price deflation at least for the rest of 2009. The rate of deflation, though, is expected to gradually subside in the second half of the year.”

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