House Price Indices

December 2013 saw year-on-year growth in the average value of homes in the middle

segment of the South African housing market slowing down further, after peaking around

April last year. This was the result of base effects and continuing month-on-month price

growth of less than 1% up to year-end. Economic conditions in general as well as trends in

household finances and consumer confidence have also affected the property market and

property price growth during the course of the year. These trends in house prices are

according to the Absa house price indices, which are based on applications for mortgage

finance received and approved by the bank in respect of middle-segment small, mediumsized

and large homes (see explanatory notes).

Average nominal year-on-year price growth was in single digits in all three middle-segment

categories of housing in 2013. The average nominal value of homes in each category was

as follows in December last year:

The country’s economic performance was under pressure during 2013, with real growth

estimated to have been 1,8% on the back of major production losses as a result of labour

strikes, while growth in consumption expenditure remained low. Based on expected trends

in global growth and prospects for the domestic economy, growth in the country’s real

gross domestic product is forecast to rise to 2,7% in 2014.

Consumer price inflation slowed down to 5,3% year-on-year (y/y) in November as a result

of a drop in fuel prices and lower food price inflation. However, domestic fuel prices edged

up again in both December and January on the back of movements in the rand exchange

rate and international oil prices, which will cause inflationary pressures. Consumer price

inflation is forecast to average 5,7% in 2014. Based on the outlook for the economy and

inflation, interest rates are forecast to remain unchanged until the third quarter of 2015

before being hiked.

The residential property market will continue to be driven by economic developments and

trends in household finances and consumer confidence. Single-digit nominal house price

growth is forecast for 2014, while real price growth will be constrained by consumer price

inflation which is expected to be just below the 6% level for the year. Continued low

interest rates will support the housing market and the demand for mortgage finance.

Click HERE for the full report

05 Aug 2015
Author Jacques du Toit

519 of 558