Standard Bank: Year-on-Year House Price Growth for Dec 2007 Was 0%

From Standard Banks Residential property gauge(PDF):

House price growth as measured by Standard Bank’ median house price1 index was recorded at 0.0% y/y in December 2007. In level terms the median house price
was recorded at R550,000. The December outcome brought the five-month moving
average growth rate to 5.6% y/y.

Here are some graphs from the report (All copyrights remain with Standard Bank). First up house price growth:
If you bought a R1 000 000 house in December 2006 with no money down, you've just given the bank R140 000 to rent your house. You've made no capital gains and all the money you have paid has gone to pay off the interest.

To recover those losses house prices have to rise 14% at least, but forecasts for next year on in the low single figures, if not negative (which is looking more possible every month). Which means you'll lose even more money in 2008. Even putting a 20% down payment has cost you R123 000, and that's money you have a very slim chance of getting back unless you tough it out in your new purchase for at least 7 years.


Next up looks look at mortgage advances:
Mortgage advances are still sky high. The close to 25% of bondholders who took out mortgage advances in 2007 who assumed rising property prices would cover them taking on new debt are going to be in for a suprise. If they try and sell in the near future I would guess they have to bring money to the table to cover the shortfall on what they owe and what the house is now worth.



And finally here's a graph of debt rations and insolvencies:
Notice how the 'Debt repayment to income ratio' grah has usually been a leading indicator(1999-2003). In 2003 the housing bubble kicked in and debt started a uphill trundle while insolvencies remained low. This is probably related to the private sector borrowing graph above. Everyone was "Hey I don't mind getting in debt because rising house prices will cover me taking money out the bond". Oops.

The disconnect between rising debt and insolvencies has been marked in the last 4 years but with housing prices at a virtual standstill that trend will not continue.