Nominal and real house price growth slowed down further in the first quarter of 2008, according to the latest Absa housing review.

The slowdown in growth was largely as a result of the tightening of monetary policy, stricter requirements for credit extension, and housing having become less affordable.

The average nominal price of affordable housing increased by 13.8 percent year-on-year to R277 000 in the first quarter of 2008.

Real price growth came to 3.5 percent, down from nine percent in the fourth quarter of 2007.

Nominal price growth of 9.5 percent year-on-year was recorded in middle-segment housing in the first quarter of 2008, causing the average price of a house in this market segment to come to about R976 000.

In real terms, prices dropped by 0.3 percent.

Luxury segment house prices increased

In the luxury segment of the market, house prices increased by a nominal 6.7 percent year-on-year to about R4.2-million.

The average price of houses in this category dropped by a real 2.9 percent year on year in the first quarter, compared with a decline of 0.8 percent recorded in the fourth quarter of 2007.

At a provincial level, nominal year-on-year house price growth in the middle segment of the market varied between 17.4 percent and -0.6 percent in the first quarter of 2008.

In the country's major metropolitan areas, nominal growth in house prices of between 19.4 percent and one percent was recorded in the same time period.

Nominal growth in house prices along the coast varied between 21.6 percent and 9.6 percent.

Nominal house price growth of between five and six percent is projected for 2008, resulting in a real price decline of around 4.5 percent this year, taking account of headline consumer price inflation projections.

This would be the first time since 1999 that real price growth will be in negative territory.

Sapa