The middle-segment of the South African residential property market saw year-on-year growth in nominal home values starting to slow down in recent months against the background of a declining trend in month-on-month price growth since January this year, which accelerated after May (see graph below), and a fair amount of financial strain experienced by consumers. In real terms, i.e. after adjustment for the effect of consumer price inflation, year-on-year house price growth was in positive territory in the first nine months of the year.
However, real price growth remained in low single digits during this period, impacted by consumer price inflation averaging 6,2% year-on-year (y/y) in January to September. These price trends are according to the Absa house price indices, which are based on applications for mortgage finance received and approved by the bank in respect of middle-segment small, medium-sized and large homes ABSA HPI Oct 2014