The slowing trend in house price growth continued in September, with the FNB House Price Index decelerating to 3.0% y/y for August. We have consistently argued that property prices have been unusually slow to adjust to the weak consumer fundamentals. The recent deceleration in house price growth is in line with our expectations – reflecting waning interest rate induced demand and swelling labor market pressures.
Economics Weekly 19 November 2021
After slashing interest rates to historical lows following the onset of the pandemic, the MPC hiked interest rates by 25 basis points to 3.75% at the November meeting. Domestic growth for 2021 was revised slightly lower, reflecting a larger-than-expected impact of the July unrest and factors such as load-shedding, but still shows a solid rebound from last year’s contraction. Headline inflation was steady at 5.0% y/y in October and increased by 0.2% m/m, and retail sales volumes rebounded by 2.1% y/y in September.
Finance Minister Enoch Godongwana has tabled the 2021 Medium Term Budget Policy Statement. Treasury is encouragingly determined to keep the ongoing fiscal consolidation path intact. Treasury expects the real GDP level to return to pre-pandemic level in 2022, which is a year earlier than previously projected.