Johannesburg — WITH the economy forecast to contract 0,5% this year, combined with falling employment and lower disposable household income, the residential property market is expected to remain depressed until late this year.
House prices in the middle segment of the market were forecast to drop 3%-4% in nominal terms this year, despite falling interest rates, according to Absa 's latest quarterly housing review released yesterday.
Absa sectoral analyst Jacques du Toit said a further real decline in house prices was expected this year, based on projected consumer price inflation trends and declining nominal prices.
In the first quarter of this year house prices in the middle segment of the market - from 80mÂ' to 400m and up to R3,1m - for which mortgage finance was approved by Absa, declined for the first time on a year-on- year terms since late 1986.
In real terms, after adjustment for the effect of inflation, house prices in the middle segment dropped for the fifth successive quarter, slumping 3,6% in the first quarter from 2,6% in the fourth quarter of last year.
Prices in the luxury segment of the market have performed visibly better in recent quarters than those in the middle segment, where prices are declining over a wide front in nominal terms.
Thabang Mokopanele
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