House price growth appears to have peaked

Nominal year-on-year growth in the average value of homes in the middle segment of the South African residential property market appears to have reached an upper turning point in March 2013. This is in line with the expectation that base effects and slowing monthly price growth since mid-2012 would eventually bring about a moderation in year-on-year price growth. Against this background nominal house price growth was marginally down to 11,1% year-on-year (y/y) in April, after a revised growth rate of 11,3% y/y in March. Real price growth, i.e. after adjustment for the effect of consumer price inflation, came to 5,2% y/y in March. 

Based on the latest trends in house price growth and factors impacting the housing market, single-digit nominal year-on-year price growth is forecast by ABSA for the full year. Real house price growth will continue to be driven by a combination of movements in nominal prices and consumer price inflation.
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