John Loos, an FNB household and property sector strategist, cautioned against expecting too much.
The FNB House Price Index released yesterday reported that the annual average house price growth rate for 2018 would shift nearer to 5percent from an average price growth rate of 3.7percent last year.
“This is not a major improvement, but it stems from expectations of marginal economic growth improvement in 2018, from an estimated 0.7percent last year to 1.2percent, and one lone interest hike rate only late in 2018 not expected to have a significant dampening effect,” Loos said.
He also said the political and policy environment would weigh heavily on the growth figures, with 2018 being a run-up to the 2019 elections.
“Uncertainty around policy direction makes forecasting even tougher than it would be under conditions of greater certainty, posing significant risks to forecasts. Widely publicised ratings agency downgrades for the country, should they occur, can quite easily dampen national sentiment, and this can easily feed into a housing market either directly, or indirectly via the economic impact,” Loos said.
Average house price growth had slowed from a multi-year high of 7percent reached in 2014 to an average annual growth rate of 4.8percent in 2016 and 3.7percent in 2017. The index expected a 3percent average house price growth for 2017.
Simon Bray, Private Property chief executive, said yesterday that 2017 was a tough year for the property market in general and, although there were pockets of excellence, the market was subdued with low average house price growth.
“Indications so far are that 2018 may be a better one for the market. With the ANC elective conference over and a business savvy and investor-friendly president at its helm, the hope is that we will see more stability with regard to policy and personnel,” he said.
- BUSINESS REPORT