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SA house price growth trend levels out in January   Article Date :12 Feb 2007 Comment from ABSA Absa reports a nominal house price growth of 14,8% year-on-year being recorded in January in the middle segment of the market, compared with a revised growth rate of also 14,8% in December. The average price of a house in this segment of the market, according to the bank, came to about R877 000 in January 2007. In real terms, year-on-year growth of 8,5% was recorded in December compared with a revised growth rate of 8,8% in November, based on the headline consumer price index. Average real year-on-year house price growth of 10,1% was recorded in 2007. On a month-on-month basis, nominal price growth was slightly down at 1,2% in January after growth of 1,3% was recorded in December last year. House prices increased by 1% month-on-month in real terms in December (1,5% month-on-month in November). CPIX inflation remained stable at 5% between October and December, while PPI inflation was slightly lower at year-end. However, the MPC will probably remain concerned about the volatility in international oil prices and the rand exchange, as well as credit demand, especially with regard to mortgage advances, which continued to grow at 30% year-on-year, easing only slightly over the past two months. Against this background, Absa expects interest rates to be hiked by another 50 basis at the MPC meeting next week. Thereafter, rates could remain stable until early 2008. As a result, commercial banks’ prime and variable mortgage interest rates are set to peak at a level of 13% in the current cycle. With interest rates expected to increase again next week before peaking, and the full effect of the higher rates since mid-2006 still to work through to the property market and the rest of the economy, house price growth is projected to soften somewhat further towards the end of the year. CLICK HERE TO RETURN TO THE MAIN NEWS PAGE