Against the background of macroeconomic developments that impacted consumer finances and confidence, year-on-year growth in the average value of middle-segment homes in the South African residential property market was markedly lower in 2015 compared with the preceding two years. After nominal price growth of 10% in 2013 and 9,3% in 2014, home values increased by around 6% in 2015.
The South African economy is forecast to show low growth in 2016, with factors such as rising inflation, higher interest rates and continued financial pressure on consumers to weigh on the economy’s performance. Against this background, subdued demand for and supply of housing is expected during the course of the year. Nominal house price growth is forecast to average around the 5% level this year, with the risk for price growth to the downside in view of trends in and prospects for the economy and the household sector. Based on the outlook for nominal price growth and the headline consumer price inflation rate, real house price deflation is projected over the next 12 months.
Read more here: ABSA HPI Dec 2015