Nominal house-price growth of 15,4% year-on-year was recorded in February from a revised 15,4% in January, according to the latest Absa house-price index. This brings the average price of a house in the survey to R891 700 in February this year.
However, the researchers pointed to growth potentially levelling off again later in the year.
In real terms, year-on-year growth of 8,9% was recorded in January from a revised 8,9% in December, while nominal growth on a month-on-month basis was reported slightly down at 1,1% after growth of 1,4% in January.
“Month-on-month house-price growth is tending downwards after moving higher between July and November last year. This, together with a currently growing possibility of higher interest rates in April, [means that] house-price growth is forecast to level off again later this year,” said the Absa researchers.
They pointed to further upward pressure on inflation in the near future; continued strong growth in domestic credit extension; and a ballooning trade deficit in the fourth quarter of last year, which would cause the current-account deficit to remain high, as potential factors weighing on the interest-rate outlook.
The Absa house-price index is based on the total purchase price of houses of between 80 square metres and 400 square metres, valued at R2,7-million or less in 2006 (including improvements), for which loan applications were approved by Absa.
The index growth in December was just 13,5%, and overall in 2006 it was 15,2% from a whopping 22,7% in 2005. At the time, the Absa researchers said that growth in 2007 could be expected to continue the downward trend to 9% before improving again in 2008. — I-Net Bridge