Home buyers are back on the streets scouting for homes as residential property prices bottom out, industry players said on Tuesday.

The Absa house price index for February showed that average house prices for homes in the small, medium and large categories have continued their nominal growth.

"House prices have bottomed out, there's no doubt about it," said Herschel Jawitz, CEO of Jawitz Properties.

According to him, for the first time since the market went pear-shaped in 2008 "buyers sense the market has bottomed out and that it's time to buy".

The average small house (80m2 to 140m2) saw a 1.6% year-on-year (y/y) increase in nominal value to R676 800, compared with a revised growth rate of 0.7% recorded in January, said Absa.

According to Jawitz, the recovery will come from the R500 000 to R3m segment of the market.

"There's more activity than at the luxury end," he said. "People are buying out of necessity as families grow, for example."

Values of medium-sized houses (141m2 to 220m2) went up 2.2% y/y to R953 600 in February, after a revised increase of 1% was registered in January.

According to Absa, the average nominal value of large houses (221m2 to 400m2) increased by 3.3% y/y in February to R1.4m, up from 3.1% in January.

However, Absa predicted electricity hikes of 24.8% will fuel inflation and put further pressure on consumers.

"It's going to be a gradual and measured recovery - there won't be a sharp increase in prices," said Jawitz.
Fin24.com