South Africa house-price growth slumps

Bloomberg

Growth in nominal house prices slowed from 14.5 percent in 2007, Johannesburg-based Absa said in an e-mailed statement Friday. Home prices rose an annual 1 percent in December, little changed from a revised 0.9 percent in November, it added.

The property market will be slow to recover this year even as the central bank probably lowers its benchmark interest rate by a total of 3 percentage points and inflation slows, Absa said. Job losses and a slump in economic growth to below 1 percent in 2009 from about 3 percent last year may depress growth in house prices until the second half of the year, the lender said.

"The outlook for the residential property market remains bleak," Jacques du Toit, a property economist at Absa, said. "Despite expectations of lower inflation and interest rates, economic conditions are expected to remain depressed for most of the year."

Nominal house prices may decline as much as 2.5 percent in 2009, Absa said. Adjusted for inflation, prices will probably plunge by as much 8 percent this year, the lender said.