Prospects for house-price growth in next 12 months

02-06-2006

Whereas most property commentators are predicting average house-price growth in excess of 12% over the next 12-month period, CEO of Rode & Associates Erwin Rode envisages single-digit growth in the region of 7–9%.

This forecast is, amongst other things, based on market trends and ABSA’s latest house price index, showing that the April 2006 month-on-month house price growth has slowed to only 0,5% or roughly 7% annualized.

Affordability has been one of the main factors leading to a weakening of price growth, and according to Rode there is no reason to believe affordability will improve during the remainder of the year. In fact, rising oil prices and a depreciating rand are likely to have a negative impact on disposable income. Moreover these factors, or fears thereof, are making an interest rate hike all the more likely.