Year-on-year growth in the average nominal value of middle-segment homes in the South African residential property market softened somewhat further in February 2015, whereas real price growth accelerated up to January due to declining inflation. In real terms, house price growth improved further to 4,3% y/y in January this year to its highest level since mid-2013. This was the effect of headline consumer price inflation slowing down to 4,4% y/y in January on the back of declining food price inflation and a significant downward trend in domestic fuel prices since the third quarter of last year, driven by a major drop in international oil prices in the second half of 2014.
Based on prospects for the main economic and household sector-related factors, single-digit nominal house price growth is projected to continue in 2015, with some real price growth expected on the back of the outlook for inflation.
