Real Estate News Lowest growth in seven-years forecast for next year
House price growth in September was the lowest in more than six years, according to the Absa House Price Index (HPI) and the outlook continues to look bleak.
Last month, nominal house price growth of 13,3% was recorded. This is the lowest year-on-year growth since January 2000, when it was 11,8%.
Absa forecasts nominal year-on-year price growth of between 7% and 8% next year, which will be the lowest since 1999 when it was 4,6%.
The bank expects growth of 13 to 14% for the full year, which is more than 40% less than reported growth of 22,9% in 2005.
Average nominal house price growth for the first nine months of the year came to 14,9%.
In real terms, year-on-year growth of 8% was recorded in August compared with a revised growth rate of 8,8% in July. This was the lowest real year-on-year growth since February 2003, when it was 8,1%.
For the first eight months of the year, average real year-on-year growth in house prices was 10,5%.
The report noted that Augusts growth in private-sector extension (25% y/y), especially growth in mortgage advances (30,3% y/y) remained high.
Absa predicts interest rates to be increased by half a percentage point on October 12 and another 50 basis points at the MPC meeting in December. It maintains this pace of rate increases will continue into the first half of 2007.
Article by: Gaylyn Wingate-Pearse - www.moneyweb.co.za