Year-on-year house price deflation worsened in December to -1.7%, while price inflation for 2008 as a whole averaged +5.2% due to better conditions early on last year, the latest FNB House Price Index shows.

FNB property strategist John Loos says however that an expected series of interest rate cuts should have some positive influence on residential demand, although this influence will be partly negated by weak economic growth as the global economic crisis continues.

'But despite some demand recovery, I believe that oversupplies of stock could take a while longer to be mopped up, and as such expect the FNB House Price Index to show year-on-year deflation for the entire 2009,' he adds.

The Times (Johannesburg)