Growth in the average nominal value of homes in the middle-segment categories of the South African residential market varied between 6,5% year-on-year (y/y) and 8,5% y/y in the first seven months of 2014. On a month-on-month basis, nominal price growth has been on a gradual downward trend since the start of the year, which is expected to dampen year-on-year growth at some stage. Real house price growth, i.e. after adjustment for the effect of consumer price inflation, was recorded across all three segments of housing in the first half of the year compared with the corresponding period in 2013. Real price growth was to some extent dampened by upward pressure on inflation in recent months.
Based on trends in and prospects for the economy and household finances, as well as house price growth in the first seven months of the year, single-digit nominal price growth is expected in the remainder of 2014 and in 2015. Real house price growth will be the result of the combined effect of nominal price trends and inflation, with relatively low real price inflation projected for this year and 2015.