Absa’s latest house price index shows how much the average home costs in South Africa, and what lies ahead for the local property market.<\/p>\n
Year-on-year growth in the average nominal value of middle-segment homes in the South African residential property market showed some improvement up to April 2016, according to the index.<\/p>\n
However, in real terms – after adjustments for consumer price inflation – growth stayed flat.<\/p>\n
According to Absa, the average nominal value of homes in each of the middle-segment categories\u00a0 in April 2016 was as follows:<\/p>\n
The value of medium-sized homes in real terms has declined by 1.3% so far in 2016, while small homes have seen the biggest growth at 1.9%, Absa said.<\/p>\n
Looking ahead, the residential property market is expected to reflect the tough economic conditions in South Africa, and how these will affect consumers, especially home owners.<\/p>\n
Economic growth is forecast at 0.6% in 2016, while headline consumer price inflation expected to increase to a level of above 7% by year-end.<\/p>\n
“The upward pressure on inflation, which will to a large extent be driven by a weakening exchange rate and rising food, fuel and electricity prices, is to cause further interest rate hikes in coming months. Prime lending and variable mortgage interest rates, currently 10,5% per annum, are forecast at 11% by the end of the year,” Absa said.<\/p>\n
“These developments will negatively affect household finances, with credit-risk profiles, financial vulnerability and consumer confidence to come under further pressure, which may cause credit providers to adjust risk appetites and lending criteria accordingly.”<\/p>\n
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