In real terms y/y growth of 8.9% was recorded in January from a revised 8.9% in December, while nominal growth on a month-on-month (m/m) basis was reported slightly down at 1.1% after 1.4% growth in January.

"Month-on-month house price growth is tending downwards after moving higher between July and November last year. This, together with a currently growing possibility of higher interest rates in April, house price growth is forecast to level off again later this year," said the Absa researchers.

They pointed to further upward pressure on inflation in the near future together with continued strong growth in domestic credit extension and a ballooning trade deficit in the fourth quarter of last year, which would cause the current account deficit to remain high, as potential factors weighing on the interest rate outlook.

The Absa House Price Index is based on the total purchase price of houses in the 80m²-400m² size category, valued at 2.7 million rand or less in 2006 (including improvements), in respect of which loan applications were approved by Absa.

The Absa House Price Index growth in December was at just 13.5% and overall in 2006 it was at 15.2% from a whopping 22.7% in 2005. At the time the Absa researchers said that growth in 2007 could be expected to continue the downward trend to 9% before improving again in 2008.