Nominal year-on-year growth in the average value of middle-segment homes in the South African residential property market remained in single digits in January 2016, with a recent gradual rising trend evident in price growth in two categories of housing analysed.
Despite challenging economic conditions that affect consumers, such as rising inflation and interest rates, the uptick in price growth in some segments of housing was largely the result of the base effect of slowing price growth a year ago. In real terms, i.e. after adjustment for the effect of headline consumer price inflation, price growth remained low in the middle segment of the market.
The outlook for nominal house price growth is to slow down from just above 6% in 2015 to 5% this year, with the risk for price growth to the downside against the background of trends in and prospects for the economy and the household sector. Based on expectations for nominal house price growth and consumer price inflation, some real price deflation is projected for 2016.
Read more here: ABSA House Price Indices January 2016