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Johannesburg - The nominal year-on-year (y/y) growth in the average value of small, medium-sized and large homes in the middle segment of the housing market remained relatively low on a y/y basis in February 2011, Absa said on Monday.
This is based on the Absa Group [JSE:ASA] house price indices.
"The base effect of price movements 12 months ago is currently a key factor, which is expected to remain an important factor in the first six months of this year," said Jacques du Toit, senior property analyst at Absa Home Loans.
Absa said nominal house price growth of only 1.5% was forecast for 2011, with prices set to drop in real terms. This was taking into account nominal price trends and inflation.
Absa said that moderate month-on-month price growth was evident in all three segments of housing since late 2010. This was believed to be related to low inflation and interest rates, a higher level of real economic growth, and an increase in employment towards the end of last year.
"In real terms, the prices of medium-sized homes were declining over the past three months compared with a year ago, while the average real value of large houses is on a declining trend since August last year, compared with the same period 12 months ago," said Du Toit.
The economy was forecast to expand by between 3.5% and 4% this year, with a moderate increase in employment, further growth in household disposable income, and interest rates remaining low.
"These factors, as well as the lowering of transfer duty on property announced in the national budget in February, are expected to support the residential property market in 2011," Du Toit said.
He warned, however, that consumer price inflation is forecast to rise during the course of the year on the back of rising food and oil prices and the rand exhange rate.
He added that oil price and currency movements have adversely affected domestic fuel prices since late last year, while a hike of 18 cents per litre in fuel taxes on April 6 2011 would cause fuell prices to rise even further.
"Higher transport costs and consumer price inflation, together with rising electricity prices, municipal rates, taxes and levies, would affect household finances and eventually the residential property market in 2011," Absa said.
"Taking account of recent trends in house prices, as well as the abovementioned expectations with regard to the economy, nominal house price growth of about 1.5% is currently forecast for 2011.
"Based on this forecast and a projected average consumer price inflation rate of between 4.5% and 5% this year, house prices are set to record a real decline in 2011," Du Toit said.
This is based on the Absa Group [JSE:ASA] house price indices.
"The base effect of price movements 12 months ago is currently a key factor, which is expected to remain an important factor in the first six months of this year," said Jacques du Toit, senior property analyst at Absa Home Loans.
Absa said nominal house price growth of only 1.5% was forecast for 2011, with prices set to drop in real terms. This was taking into account nominal price trends and inflation.
Absa said that moderate month-on-month price growth was evident in all three segments of housing since late 2010. This was believed to be related to low inflation and interest rates, a higher level of real economic growth, and an increase in employment towards the end of last year.
"In real terms, the prices of medium-sized homes were declining over the past three months compared with a year ago, while the average real value of large houses is on a declining trend since August last year, compared with the same period 12 months ago," said Du Toit.
The economy was forecast to expand by between 3.5% and 4% this year, with a moderate increase in employment, further growth in household disposable income, and interest rates remaining low.
"These factors, as well as the lowering of transfer duty on property announced in the national budget in February, are expected to support the residential property market in 2011," Du Toit said.
He warned, however, that consumer price inflation is forecast to rise during the course of the year on the back of rising food and oil prices and the rand exhange rate.
He added that oil price and currency movements have adversely affected domestic fuel prices since late last year, while a hike of 18 cents per litre in fuel taxes on April 6 2011 would cause fuell prices to rise even further.
"Higher transport costs and consumer price inflation, together with rising electricity prices, municipal rates, taxes and levies, would affect household finances and eventually the residential property market in 2011," Absa said.
"Taking account of recent trends in house prices, as well as the abovementioned expectations with regard to the economy, nominal house price growth of about 1.5% is currently forecast for 2011.
"Based on this forecast and a projected average consumer price inflation rate of between 4.5% and 5% this year, house prices are set to record a real decline in 2011," Du Toit said.
