Johannesburg - Trends in and prospects for the economy and the consumer sector did not bode well for the property market and house price growth in the second half of this year, Absa Home Loans property analyst Jacques du Toit said on Tuesday.
This was based on prospects for economic growth, employment, inflation and interest rates and in the consumer sector, the prospects for income growth, savings, credit demand, debt servicing, credit risk profiles and confidence.
Absa is forecasting nominal house prices of about 6 percent for this year.
But Du Toit said house price growth might slow down even further next year on the back of trends in and the outlook for the economy and the household sector, which would be reflected in the property market.
There was also “a significant probability” of house prices deflating in real terms up to late next year, he said.
Absa said that nominal month-on-month house price growth remained relatively low and averaged 0.5 percent in the second quarter of this year while house prices declined in real terms in the three-month period from March to May.
Du Toit said house prices in May were still an average of 10.5 percent lower in real terms compared with the peak in the residential property market in August 2007.
He said the gradual slowdown in year-on-year house price growth, which commenced in October was showing early signs of temporarily levelling out as a result of base effects.
This slowdown was largely driven by economic trends and developments regarding household finances, he said.
Business Report