Johannesburg — A TEMPORARY surge in house price growth occurred last month, with residential properties 8% more expensive in October than a year earlier, according to Standard Bank's latest residential property gauge.

But Standard Bank said the increase was not a signal of an "improvement in the housing market or general consumer activity" but reflected the "month-to-month volatility prevalent in most economic indicators".

In September, house price growth was only 2,9% higher than it was a year earlier, the lowest rate of growth since December 2002.

Standard Bank said the median house price rose only marginally, from R530000 in September to R540000 in October.

The bank said the five-month moving average growth rate in house prices decreased to 5,4% year on year last month, from 6,5% year on year in September.

The rising interest rate environment is expected to further aggravate the slowdown in price growth.

Property economist Erwin Rode, of Rode & Associates, said the effect of rising interest rates would be felt only about "three-quarters from the event".

"The slowdown we are seeing at the moment is a slowdown that has been in the system before the rise in interest rates started. That slowdown is linked to affordability."

Chris Renecle, a director at Renprop, said there was still some growth potential in the housing market, where units were priced at R600000 and below.