Property barometer - June 2017

The FNB House Price Index’s year-on-year inflation rate accelerated in May, but remains in lower single digits and negative in real terms In May 2017, the FNB House Price Index showed further acceleration in yearon-year growth compared with revised April growth, and has now shown accelerating growth for 5 consecutive months. However, at 4.7%, this remains a mediocre market, and adjusting for CPI inflation implies a negative growth rate in real terms. On a month-on-month basis, the index recorded a return to slowing growth in April and May, after a strengthening period in the 1st quarter of 2017, suggesting another possible housing market and economic “soft” patch emerging.

KEY POINTS

• The FNB House Price Index for May 2017 rose by 4.7% year-on-year. This is a mild acceleration on the revised 4.2% rate recorded for April, and the 5th consecutive month of year-on-year price growth acceleration.

• However, examining house price growth on a month-on-month basis, we see the onset of some mild slowing in growth in April and May. This suggests that, after a mildly better 1st quarter of 2017, the 2nd quarter may have once again been seeing renewed economic weakness along with the Housing Market slowing.

• In real terms, when adjusting for CPI (Consumer Price Index) inflation, the rate of house price growth was negative to the tune of -1.1% year-on-year in April (May CPI data not yet available), after a revised -2.4% in March.

• The average price of homes transacted in May was R1,112,466.  

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