Property Barometer - May 2016

The FNB House Price Index’s year-on-year inflation rate speeds up, perhaps reflecting a slightly better economy, and a strong Western Cape In May 2016, the FNB House Price Index recorded a 7.4% year-on-year rate of increase, which is slightly faster than the 7.0% revised rate of the prior month. Given CPI (Consumer Price Index) inflation of 6.2% in April, in real terms average house price inflation was a modest 0.7% year-on-year in that month, reflecting a still-well balanced market. Higher nominal house price inflation may be partly the lagged effect of a shift to a higher economy-wide inflation environment since a year ago. However, it may also reflect a slightly better economic environment in the 2nd quarter of 2016, after a dismal start to the year in the 1st quarter. Furthermore, we believe that the national house price growth average currently receives strong support from the Western Cape region, which has bucked the slowing trend recently observed in other provinces to record double-digit house price growth early in 2016.

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