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Absa forecasting 21% house price growth   Article Date :27 Oct 2005 Projections from ABSA. Absa is projecting a nominal house price growth of around 21 percent for the year, compared with growth of more than 32 percent recorded in 2004. The affordability of housing, taking into account house price, income and interest rate trends, will remain an important factor over the next 12 months, especially for first-time and low- to middle-income home buyers. South Africa's largest commercial bank expects a nominal house price growth of between five to 10 percent in 2006. In view of recent trends in the international oil price and domestic fuel prices, CPIX inflation is expected to be under upward pressure during the rest of the year. As a result, interest rates are forecast by Absa to remain at current levels until early 2006, when a rate rise of 50 basis points might occur. In its September House Price Index released today, the bank reports nominal house price growth of 17,6 percent year-on-year (the lowest year-on-year growth since December 2002 when it was 17,3 percent) was recorded in September 2005 compared with a revised growth rate of 19,6 percent in August this year. The average nominal year-on-year growth in house prices during the first nine months of the year was 24,3 percent. In real terms, year-on-year growth of 15,1 percent was recorded in August compared with a revised growth rate of 17,6 percent in July, based on the headline consumer price index. The average real year-on-year growth in house prices during January to August was 21,4 percent, which is based on a headline CPI inflation rate of 3,2 percent on average during this period. On a month-on-month basis, nominal growth in house prices was 0,6 percent in September compared with a revised 0,8 percent in August this year. In real terms, month-on-month growth was 0,4 percent in August. The monthly mortgage repayment and the qualifying gross monthly income were 13,8 percent higher in September 2005 compared with September last year, based on current interest rates and average house prices. In August the year-on-year growth in these variables was 14,2 percent. This implies that housing is on average still less affordable than a year ago. CLICK HERE TO RETURN TO THE MAIN NEWS PAGE