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Cautious optimism about SA residential market

Cape Town - Pam Golding Properties (PGP) remains cautiously optimistic about the residential market in South Africa, CEO Andrew Golding said on Thursday.

"Of course crystal ball gazing is just that," said Golding during an overview of the SA residential property market.

"In the face of a sluggish and uncertain domestic and global growth environment and ongoing socio-political challenges, the residential property market in SA continues to exhibit extraordinary resilience and remains one of the few bright spots in an otherwise relatively lacklustre economy."

At the same time, there are, however, signs emerging that the national housing market is beginning to lose some momentum in the face of persistent economic headwinds, according to Golding. There are, however, still several sectors within the local housing market which continue to flourish and register positive real growth rates.

For example, during the year to date, house price inflation in the Western Cape has risen by 10.35%. Adjusting for inflation, this translates into a real increase in house prices of 4.2% during the first nine months of the year.

The Pam Golding Residential Property Index (PGP Index) showed an average house price inflation rate of 5.5% in 2015 and reached a cyclical peak of 5.7% in March 2016. It now appears to be slowing. The PGP Index has averaged 5.6% during the year to date, while the consumer inflation rate has averaged 6.2% during the same period.

"This would suggest that, after adjusting for inflation, real South African house prices have fallen by an average of 0.6% compared to the same period last year," said Golding.

"However, this picture is actually misleading since the national house price index is a weighted average of house prices across the country. As a result, this national average includes a wide range of divergent performances evident in the different regions, metros, price bands and unit types – all of which make up the national housing market."

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