House prices across South Africa registered average gain of 6.8% as per data released by FNB House Price Index on Tuesday. However, the rise was lower compared to year 2012 when the real estate prices firmed up by 7.1 percent. However, the real estate price rise compared to basis of inflation is much lower.
Real estate experts find the trend encouraging as the prices have continued to rise for second year in a row. Average house price was R891,976 in 2013 against R835,480 in 2012. Real estate sector depends on interest rates to a large extent. However, market experts do not expect rate cut from South African Reserve Bank in 2014. This could lead to lesser number of deals as end users shy away from buying new homes.
Recent data released by National Credit Regulator has shown positive trend in lending for real estate sector in previous few quarters. Increase of 3.2 percent was witnessed in residential housing projects completed during first 10 months of last year. If the economy stays positive in 2014, real estate developers are confident of rise of more than 6 percent in real estate valuations. Real estate developers have also shown confidence in economy and are planning new projects in year 2014.
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