Money World economy
FNB's annual house price index climbed in November, the bank said today. The index was up 2% in November compared with a revised 0.9% drop the month before.
Home loans strategist John Loos said in real terms, house price deflation persisted, but at a diminishing rate. "The November number is actually just the continuation of an improving trend which started in the form of diminishing house price deflation from around June, a lagged response to gradually rising demand from early in the year as interest rates began to fall."
He said the improving demand and price situation made for the likelihood of a better year in 2010, with not only the rest of this year's interest rate stimulus still to feed through but also increasing signs of economic growth recovery.
"The SA Reserve Bank's Leading Business Cycle Indicator continued its month-by-month rise, and real economic growth has emerged from negative territory to record a 0.9 percent quarter-on-quarter annualised rate in the third quarter."
Loos said the pace at which house prices had returned to inflation, a few months earlier than previously expected, led him to believe that his previous forecast of five percent average price increase for 2010 was slightly on the conservative side, and that an upward revision would be in order.
