Building activity subdued The slowdown in house price growth runs parallel with the weakening SA economy. GDP growth slowed to 1.3% in the second quarter of 2011, down from 4.5% in the first quarter. The report said that building activity remained subdued, with house price growth likely to follow suit. The value of residential buildings completed (in real terms) for the period January to July 2011 fell by 7.4%, from the corresponding period in 2010. Residential contractors, as surveyed by the Bureau of Economic Research, suffered a fall in business confidence, to 20 index points in quarter three, from 24 index points in the second quarter. Household disposable income Standard Bank’s median house price posted a growth rate of 0.6% in September as compared to the same period last year, down from 1.6% in August. Growth in real terms remains negative. House price growth slowed to a crawl in September according to a report by Standard Bank. This slowdown was mirrored by real household consumption expenditure growth decelerating to 3.8% in the second quarter, down from a robust 5.2% in the first quarter. Growth in total credit extension to households eased to 5.2% in August, from 6.6% in July. Growth in mortgage advances mirrored this decline, registering 1.6% in August, from 3% in July. The bank said that household credit growth remained muted despite a historically low interest rate environment. Sapa Standard Bank said that household consumption was undermined by receding real income growth and the sluggish SA labour market. Growth in household disposable income slowed to 4.1% in the second quarter of this year, down from 5.4% in the first quarter. The combination of household disposable income growth and historically low nominal interest rates has contributed to the slight improvement in the ratio of household debt to disposable income, to 75.9% in the second quarter of the year, from 76.8% in the first. 13 October 2011 However, households continue to carry a sizeable debt burden, with the household debt to income ratio in the second quarter not significantly different from its 2008 peak of 82%.