S&P ex­pects house prices to be stag­nant

The Star Early Edition - - BUSINESS REPORT - Roy Cokayne

S&P GLOBAL Rat­ings is pro­ject­ing muted nom­i­nal house price growth of 5.5 per­cent in South Africa for this year. This im­plies stag­na­tion in home prices in real terms.

The rat­ings agency has fore­cast nom­i­nal house price growth of 6.5 per­cent next year.

It said South Africa’s hous­ing mar­ket was bur­dened by a weak macroe­co­nomic en­vi­ron­ment, still high house­hold in­debt­ed­ness and a ris­ing in­ter­est rate bur­den.

Ta­tiana Ly­senko, a se­nior econ­o­mist at S&P Global Rat­ings, said res­i­den­tial prop­erty prices stag­nated in real terms last year, with above tar­get in­fla­tion erod­ing nom­i­nal price gains.

Ly­senko said home prices im­proved at the end of last year as fi­nan­cial con­di­tions sta­bilised.

But she stressed that still sub­dued eco­nomic growth, per­sis­tent very high un­em­ploy­ment and el­e­vated con­sumer in­debt­ed­ness did not bode well for the South African hous­ing mar­ket in the near term, par­tic­u­larly if in­ter­est rates con­tin­ued to rise as an­tic­i­pated by S&P’s base­line sce­nario.

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