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The SA Daily 08 June 2018

HPI slides in May but cash market rises

  • SBR’s HPI retreated to 4.8% y/y in May, from 5.1% in April (revised from 5.3% y/y). On a m/m basis, prices slid, by 0.2%, taking the national median price from R953.5k in April to R952k in May.
  • The May HPI reflects cautious take up of mortgage advances which averaged just 3.3% y/y (or a contraction of 1.0%, when adjusting for CPI) in the first four months this year (versus 3% in the first four months of 2017) despite lower borrowing costs and more upbeat consumer sentiment in Q1:18. However, while SBR’s HPI averaged 5.1% in Q1:18, a similarly constructed “cash market” HPI (based on non-mortgaged transactions in SA) recorded 9.9% y/y average growth in Q1:18.
  • The “cash market” HPI reflects the currently higher levels of consumer sentiment, while the SBR HPI reflects the currently cautious mortgage advances. Indeed, cash buyers are not constrained by credit conditions (which have been disappointing in recent months). Credit conditions are clearly keeping property prices from gaining traction (see HPI backed down of 06 June, by Siphamandla Mkhwanazi).

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