South African consumers are likely to continue experiencing financial strain in the wake of a poorly performing economy, low employment and real income growth, one of the country’s leading banks ABSA says in its latest Housing Price Indices report.
The economy contracted by 0.6 percent in the first quarter.
Barclays, the parent company of ABSA, says growth for this year will only be 1.4
percent. The Reserve Bank says it will be 2 percent.
For those who can raise the cash, this is the ideal time to
buy property because the housing market has been stable with average price
growth of between 8 and 9 percent during the past nine months.
But upward pressure on inflation and an expected further
hike in interest rates will affect consumers’ spending power and impact credit
accessibility, affordability and demand.
Average prices for homes in May were:
- Small homes (80m²-140m²): R837 200
- Medium-sized homes (141m²-220 m²): R1 146 800
- Large homes (221m²-400m²): R1 780 200
Consumer price inflation averaged 6% year-on-year in the
first four months of the year, and is forecast to remain above this level for
the rest of the year.
Interest rates are expected to be hiked by another 50 basis
points in September, which will bring prime lending and variable mortgage
interest rates to a level of 9.5% per annum by year-end.
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