House price growth to remain low
Category News Articles
08 Dec 2011
South African house price growth appears to be slowing down again according to the latest trends in the Absa house price indices.
Absa says the recent developments with regard to nominal house price growth came against the backdrop of slowing or declining price trends on a monthly basis in the various categories of housing over the past few months.
These were expected to eventually lead to a slowdown in year-on-year (y/y) price growth at a later stage.
Rising headline consumer price inflation, currently at 6 percent y/y caused real house price deflation to continue unabatedly across all three segments of housing up to October this year.
The average real price of middle-segment houses calculated at constant 2008 prices was in October when it was as much as 13.6 percent below the peak of August 2007.
This was caused by average nominal house price growth being below the average headline consumer price inflation rate during this period.
The bank said that nominal house price growth of around 2 percent was forecast for the full year of 2011 with price growth expected to remain relatively low in 2012.
Against the background of economic developments during the course of next year, the short- to medium-term performance of the residential property market and demand for mortgage finance will be driven by the state of consumer finances and credit records, as well as trends with regard to consumer confidence.
In real terms, after adjustment for the effect of inflation, house prices are set to decline further towards the end of the year and into next year, based on average nominal price growth expected to be below the average headline consumer price inflation rate during this period. -
