I've been eyeing out all the upbeat talk about property price prospects for this year with a somewhat sceptical eye. Well, the hard evidence is starting to come in.
House prices, excluding the effect of inflation, dropped by 2.5 percent year on year in March, the biggest decline since May 1997.

Absa's latest house price index, released yesterday, shows that the real price of a middle-segment house has dropped by 3 percent from an all-time high of about R651 500 in August last year to about R631 800 in March this year.

The middle segment of the market is defined by Absa as houses 80m2 to 400m2 in size and valued at R2.9 million or less, for which it had approved home loans.

Jacques du Toit, a senior property analyst at Absa, expects negative real growth in house prices of minus 4 percent to minus 4.5 percent for this year alone. This will be the first annual drop in real house prices since 1999, when it was minus 0.3 percent.

Standard Bank reported earlier this week that median house prices had dropped by 8.6 percent year on year last month to the lowest level since December 1996, when it was at minus 10.5 percent. The median is the point separating the top 50 percent of house prices from the lower 50 percent.

Willie van Aardt, Finbond's group chief executive, said it had seen mortgage origination volumes shrinking by as much as 40 percent.
full story from Business Report here