The FNB House Price Index recorded a contraction of 1.0% at the end of March 2019, compared to a contraction of 0.3% over the same period last year.
Overall, the property market remains lackluster, as the price index continues to hover in a negative territory.
Ruusa Nandago, Market Research Manager, noted that the lower prices are the result of the current economic environment.
“We attribute this (House prices movement) to the prevailing recessionary environment, which has kept demand muted, subsequently lowering prices,” said Nandago.
Meanwhile, the volume index has improved significantly to 31.6% y/y, compared to 11.7% y/y over the same period last year.
Ordinarily, negative property price growth translates to shifts in housing market dynamics as the trend bodes favourably for buyers.
Furthermore, the landings of property following the completion of several mass housing projects across the country have contributed to increased transaction volumes.
“We have also noted that volumes have accelerated in the Northern and Central regions, possibly due to the completion and availability of housing units constructed under the mass housing project. Moving forward, we expect prices to remain subdued and volumes to tick up as more serviced land becomes available,” she said.
Transactions remain concentrated in the small housing segment, where transaction volumes have picked up by 43% y/y.
This is to be expected, given construction under mass housing was concentrated in this segment.
“The large housing segment is the worst performer in terms of transactions this quarter, with volumes posting returns of -25% y/y. Upward price pressures exist in the medium, large and luxury segments, while prices in the small segment remain mute,” Nandago said.