S.Africa house price growth near 6-yr low in May

JOHANNESBURG (Reuters) - South African house prices grew at a nominal 12.3 percent year-on-year in May from a revised 13.2 percent in April, the slowest pace since early 2000, lender Absa said on Monday.

The latest data from South Africa's biggest mortgage bank backs the view that the country's property boom is tapering off, although Absa said the trend in the sector is likely to stay positive for now.

In real terms, year-on-year growth in April stood at 9.6 percent -- the lowest since March 2003 -- but higher than the annual CPIX inflation rate of 3.7 percent.

Nominal growth dipped to 0.5 percent in the month to May from a revised 0.7 percent in April, while real growth was 0.2 percent month-on-month in April.

Domestic property prices have soared by 229 percent since 2000, fuelled by the lowest interest rates in over 20 years.

Mortgage rates are at 10.5 percent, after the repo rate was gradually reduced by 6.5 percentage points to 7 percent between 2003 and 2005.

Strong domestic demand and a sharp fall in the rand currency have raised fears that interest rate might be raised this year. This would contribute to a slowdown in house prices.

"In view of these developments and expectations, average nominal house price growth of 11.5 percent is projected for 2006," said Jacques du Toit, an economist at Absa.

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