Residential property to remain weak
10-JAN-1210 January 2012 Demand for South African residential property slowed in 2011 and is not expected to improve in 2012, First National Bank said on Monday. "2011 saw slowing growth in residential demand, with economic growth slowing noticeably in the middle two quarters of the year," FNB home loans strategist John Loos said in a statement. The 2011 average house price was R802 988 - 3.1% higher than the average 2010 price of R779 041. However, when adjusting for consumer price inflation (CPI), the average house price declined by about 1.9%. The December CPI was not yet available, but Loos said average CPI for 2011 would appear to be around five percent. "This is a return to real price decline after a mild real average price increase of +1.7% in 2010," he said. The FNB Valuers' Market Strength Index showed a weakness in demand for residential property relative to supply in 2011. "We enter 2012 with a residential market showing strong supply relative to demand, and a mediocre economic performance at best," he said. "Nothing obvious pops up to suggest that this will change radically in 2012."