South Africa ’s Reserve Bank has left its key monetary policy interest rate unchanged at 6.5%, resulting in banks public lending rates remaining at a level of 10%. Interest rates have been cut by 5.5% since December 2008.

There are no rate cuts forecasted for 2010, however a rate hike is expected by mid-2011 due to inflationary pressures. Mortgage repayments are still about 29% lower than late 2008, when the mortgage rate was at 15.5% according to Absa home loans.

Year-on-year house price growth noticeably accelerated in the first half of 2010 as market conditions improved in the second half of 2009 on the back of a recovery in the economy, low interest rates and banks less tight lending criteria.

Jacques du Toit, senior property analyst, Absa, said: ‘Based on house price trends in the recent past, nominal year-on-year price growth appears to be near an upper turning point mainly as a result of the base effects of a resumption in house price growth in the second half of 2009 after prices declined during the first half of the year. These base effects are expected to cause year-on-year house price growth to slow down in the second half of 2010.’