South African Real House Prices to Decline in 2016, Absa Saysby
House prices in South Africa will decline during the next year when the effect of inflation is taken into account, according to retail bank Absa.
Nominal house price growth will be about 5 percent this year, compared with an estimated 6 percent in 2015, Jacques du Toit, a property analyst at Absa Home Loans, said in an e-mailed report on Monday. Based on the inflation outlook, Absa projects real house price deflation during the next 12 months.
“The residential property market is set to reflect the broader macroeconomic trends, with subdued demand for and supply of housing expected during the course of the year,” Du Toit wrote. “This will in turn dampen the demand for and growth in mortgage finance for housing.”
While inflation in Africa’s second-largest economy remained within the Reserve Bank’s 3 percent to 6 percent target range for the first 11 months of last year, price growth could peak at 7.3 percent in 2016, Barclays Africa, of which Absa is part, said in a separate report on Monday. Economic growth will probably slow to 0.9 percent this year from an estimated 1.3 percent in 2015, Barclays Africa said.