Nominal house price growth in the middle segment of the market slowed down to less than 1% in 2012 from almost 2% in 2011. In real terms, house prices deflated for the second consecutive year. The category for affordable housing performed the best in 2012 of the various market segments in terms of price growth. In the luxury segment price growth was barely positive in nominal terms last year, resulting in prices deflating in real terms.
The relatively low nominal house price growth of the past two years is forecast to continue in 2013. Further real house price deflation is projected for 2013 on the back of expected low nominal price growth and headline consumer price inflation forecast to average around 6% this year. Economic and consumer-related factors will continue to determine the showing of the residential property market, which will be reflected in demand and supply conditions, market activity, buying trends, transaction volumes and the demand for mortgage finance.