Absa House Price Indices

The first half of 2015 saw year-on-year growth in the average nominal value of homes in the various categories of middle-segment housing in the South African residential property market remaining subdued. After adjustment for the effect of inflation, some real house price deflation was evident in some categories of housing in May compared with the same month a year ago.

Nominal month-on-month growth in house prices remained relatively low in the second quarter of 2015, averaging 0,5% during this period, while declining in real terms in the three-month period of March to May this year. House prices were in May still down by an average of 10,5% in real terms compared with the peak in August 2007.

Nominal house price growth is forecast to average around 6% in 2015 and may slow down even further in 2016 on the back of trends in and the outlook for the economy and the household sector, which will be reflected in the property market. With the headline consumer price inflation rate forecast to rise to above the upper limit of the inflation target range of 3%-6% towards the end of the year and for most of 2016, there is a significant probability of house prices deflating in real terms up to late next year.

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