House prices in February grew by 2.3%, year-on-year. This is down from a revised 3.8% in January, and from 2017’s high of 5% reached in November.
“This does not, however, alter our view that 2018 should be a mildly stronger housing market year than 2017,” said John Loos, FNB’s household and property sector strategist, quoting from the FNB House Price Index. “We believe that this weak house price growth in early-2018 is reflective of the weak sentiment and market conditions late in 2017 still feeding through to prices with a lag.”
Loos, however, said sentiment appeared to be “much-improved” this year, and thus remained of the expectation that economic growth in 2018 would pick up, interest rates would remain stable or even decline slightly, and housing demand should be “a little stronger”.
“We remain of the expectation that 2018 will be a mildly stronger year for the housing market and house price growth, projecting a 4.8% average growth rate for 2018 after a lower 3.8% for last year,” said Loos.
January’s performance in real terms, when adjusting for CPI (Consumer Price Index) inflation, year-on-year was -0.6%, and the average price of homes transacted in February was R1,099,610.