The country’s property prices rose 32,1% in 2004 from 21,5% in 2003, South African banking group Absa said on Wednesday.
In December 2004, the monthly Absa house price index rose by 32,6% in nominal year-on-year terms and the November increase in the index was revised to 34,6%.
The Absa house price index is based on the total purchase price of houses in the 80-square-metre-to-400-square-metre category, valued at R2,2-million or less in 2004.
In real terms, year-on-year growth of 29,7% was recorded in November 2004, compared with a revised growth rate of 32,3% in October.
Turning to the outlook for property prices, Absa said that the trade-weighted exchange rate of the rand is expected to remain relatively strong during the course of 2005, with CPIX inflation (headline consumer price inflation excluding the effect of mortgage interest rates) forecast to remain within the target range of 3% to 6% in 2005.
“Against this background, the mortgage rate is projected to drop somewhat further in February, after which it is forecast to remain stable for the rest of 2005, provided that oil prices do not rise sharply and the exchange rate does not weaken dramatically from current levels,” Absa said in a statement.
The property market will be supported by a growing South African economy, and the momentum in growth in house prices during 2004 is expected to continue into 2005, with growth of between 15% and 20% in nominal terms projected for the year, Absa added. — I-Net Bridge