The first three months of 2016 saw growth in the average value of middle-segment homes in the South African residential property market remaining relatively stable at a nominal 5,7% year-on-year (y/y).
First-quarter price growth was to some extent influenced by noticeable base effects in one of the housing categories analysed. Due to continued relatively low nominal price growth and rising headline consumer price inflation to a level of 7% y/y in February, house prices deflated by almost 1% y/y in real terms in the first two months of the year. The average level of house prices was in February 2016 around 10,5% lower in real terms compared with the peak in August 2007.
Against the background of economic and household sector trends and expectations, nominal house price growth is forecast to slow down from 6,2% last year to a level of between 4,5% and 5% this year, with the risk for price growth to be even lower. Based on the forecasts for nominal house price growth and the headline consumer price inflation rate, real price deflation of around 2% is projected for 2016.
Read more here: ABSA House Price Indices March 2016