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The most expensive band of South Africa’s residential housing market contracted for six straight quarters, the longest run since at least 2010, as the cheapest band rose the most on record in the second quarter, according to data published by FNB.
The highest segment saw prices fall by 6.4% in the second quarter, while in the cheapest band prices rose by 7.6%.
"In the lower end, there is a shortage of supply of new property, at appropriate locations and price points," said Siphamandla Mkhwanazi, an economist at FNB. "Demand is also supported by higher income households, participating in buy-to let market, while the upper end is excessively supplied."
Data from FNB separates the South African housing market into five bands, based on price, with the most expensive band including houses over R9.2 million and the lowest band including houses between R492 000 and R1.2 million.
The highest priced segment once posted double digit growth rates and has not grown since the first quarter of last year. FNB expects a further contraction this year in the upper end as low interest rates persist, although they expect record growth for homes in the cheapest band.
