HOUSE price inflation slowed slightly to 18,4% year-on-year in April this year, from 18,7% recorded in March, according to the latest Lightstone Residential Property Indices.
Lightstone Risk Management, which prepares the indices, said this was a continuation of the downturn in residential property price growth since late 2004.
The residential property boom, which saw growth of more than 35% year-on-year near the end of 2004, peaked at that time and the market has seen a property price growth decline ever since. Market analysts have said that this declining trend was due to a relatively expensive residential property market that had caused demand to drop off.
A rising interest rate environment has also brought more pressure to bear on prospective home buyers.
First National Bank property strategist John Loos said on Friday he expected the residential property price growth trend to continue downwards until early next year. Loos said the coastal residential market had been the weakest sector for a while.
The Lightstone Coastal Index, which represents residential property within 500m of the coastline, recorded inflation of 10,6% year-on-year for April.
This was unchanged from March. Lightstone’s non-coastal index recorded inflation of 19% for April.
Loos said that at its peak in late 2004, the coastal property index recorded year-on-year inflation of more than 60%.
“It’s experienced a very sharp drop off since then. I think the main reason is that there is a large chunk of holiday property in the coastal strip. When times are good, a lot of inland buyers jump in and buy property. Because of its non-essential nature, when interest rates rise, these buyers hold back,” he said.
Loos said the decline in price inflation had also flattened out where the average property value is above R1,5m.
