A property analyst at Absa Home Loans Jacques du Toit says residential property is poised to show yet another reasonably solid performance in 2015.
“Nominal middle-segment price growth of around 8% is forecast, which will translate into real price growth of more than 3% this year, based on projected consumer price inflation of 4.5%, which is in line with real price growth of the past two years.”
The latest Absa House Price Index provides that the average cost of middle-segment homes within the South African residential property sector has reflected a comparatively solid growth over the past two years up to the end of 2014.
The indices used by Absa are based on applications for mortgage finance received and approved by the bank in respect of middle-segment small, medium-sized and large homes.
Du Toit said, “Nominal price growth came to 10% in 2013 after relatively poor growth in the preceding year, with price growth of around 9% recorded in 2014.”
“The house price performance came despite some challenging economic conditions experienced over this 24 month period, such as declining economic growth, a depreciating exchange rate and rising inflation and interest rates, which affected household finances.”
He further noted that, “However, a situation of normalization and more balanced housing demand and supply conditions are believed to have largely contributed to the price growth of the past two years.”