Banking group Absa foresees nominal house price growth of at least 20% for 2005, but single-digit growth for 2006.
“Nominal house price growth of at least 20% seems likely for 2005 as a whole, taking into account growth in prices of about 27% in the first six months of the year. In real terms, house price growth in 2005 is forecast to be positive for the sixth consecutive year,” Absa said in a statement.
“In view of expected stable interest rates for the remainder of 2005, and with higher rates projected as from the second half of 2006, the declining trend in house price growth is forecast to continue into next year. The affordability of housing will remain an important factor over the next 12 to 18 months. As a result, single-digit house price growth is projected for 2006,” the bank said on Thursday.
House price growth of 24,8% year-on-year was recorded in the second quarter of 2005. In real terms, house prices increased by 20,6% in the past quarter.
During the first six months of 2005, nominal house price growth came to 27% y/y, whereas real growth of 23% y/y was recorded during this period.
“Although growth in house prices was still relatively strong during January to June this year, the declining trend in both nominal and real growth, which commenced in the third quarter of 2004, continued in the second quarter of 2005. This can mainly be ascribed to the affordability of housing, taking into account house price, interest rate and income trends,” Absa said. – I-Net Bridge