House prices to increase slowly
House prices are expected to rise by only 3%-4% next year, property economists predict. That follows an equally muted performance so far this year, with most industry players expecting growth of no more than 5% for 2016 as a whole.
FNB property strategist John Loos expects average price growth to slow to 3% in 2017. Transaction volumes (number of sales) are also set to slow further over the next 12 months. Loos forecasts a 6.3% decline in sales volumes this year and a 2% drop in 2017.
He says in his latest housing review that the housing market’s sombre outlook should not be too surprising, given higher interest rates in recent years and an economic growth rate that hovers not far from zero.
Loos expects only a slight improvement in housing market activity in 2018, with the average price growth rate expected to rise to 4.7% on the back of a mild pick-up in SA’s economic growth rate.
Absa Home Loans property analyst Jacques du Toit is equally bearish. He expects growth to slow to 4.6% for 2016 as a whole (from 6.1% in 2015). Next year average growth should be 3.7%. Du Toit says house prices have already slowed markedly in the third quarter as SA households continue to labour under high debt levels, which has put a brake on mortgage lending.