S&P expects house prices to be stagnant

AP Photo/Alan Diaz

AP Photo/Alan Diaz

Published Jan 24, 2017


Pretoria - S&P Global Ratings is projecting muted nominal house price growth of 5.5 percent in South Africa for this year. This implies stagnation in home prices in real terms.

The ratings agency has forecast nominal house price growth of 6.5 percent next year.

It said South Africa’s housing market was burdened by a weak macroeconomic environment, still high household indebtedness and a rising interest rate burden.

Tatiana Lysenko, a senior economist at S&P Global Ratings, said residential property prices stagnated in real terms last year, with above target inflation eroding nominal price gains.

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Lysenko said home prices improved at the end of last year as financial conditions stabilised.

But she stressed that still subdued economic growth, persistent very high unemployment and elevated consumer indebtedness did not bode well for the South African housing market in the near term, particularly if interest rates continued to rise as anticipated by S&P’s baseline scenario.


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