Growth in the residential property market slowed further in November, with data from FNB and Standard Bank showing year-on-year increases of 3.8% and 4.8% respectively.

Though acknowledging the three rate cuts this year, the banks remain cautious in their outlook.

Standard Bank property analyst Johan Botha said: "The [Reserve Bank's] monetary policy committee, citing a favourable inflation outlook, announced another 50 basis point repo cut, to 5.5%, last month. This brings the cumulative rate cut this year to 150 points, and to 650 points since the start of the easing cycle in December 2008.

"We do not expect that the November cut will have a major impact on the property market, but it is likely to improve sentiment," said Botha.

FNB property analyst John Loos said the latest monetary easing will have "a mildly positive impact" on residential demand in the short term.

The analysts agree that the high ratio of household debt to disposable income is a big challenge in the housing market.

Standard Bank said more light would be shed on consumers' financial health next week when the Reserve Bank releases its December Quarterly Bulletin. The ratio of household debt to disposable income was 78.2% in the second quarter of 2010.

According to the bulletin, a guide to economic growth for at least six months ahead, the ratio increased by 17.5% year-on-year in September from 19.2% year-on-year in August .

The latest increase takes the indicator to an index level of 131.9 as against the 120.9 of December 2009.

Month-to-month growth was 0.8% from a 0.1% decline in August.

Botha said the indicator suggests that economic growth is slowing, as confirmed by third-quarter real GDP.

Loos, however, said the indicator suggested that, after a few recent quarters of economic slowdown, South Africa might be in for a near-term improvement in growth.

"This obviously has the potential to support slightly stronger household income growth," FNB said.

"The mild turnaround for the better in the Reserve Bank's leading indicator is probably the result of a combination of key global leading indicators pointing towards short-term improvement in global economic performance."

The FNB house-price index recorded a year-on-year rate of increase of 3.8%, lower than the previous month's revised 3.9%.

The average price for November was R787530, from R783621 in October.

But Standard Bank registered 4.8% growth year on year, compared with 6.5% in the preceding month. This takes the median house price to R581000 in November, from a revised R593000 in October.

Both banks expect modest growth in the short to medium term.