Absa's senior economist, Jacques du Toit said, reporting a dip last month to 13,5% (14%) and overall last year to 15,2% (22,7% in 2005).

House price growth in 2004 was at a much-higher 32,2%, while the dip in last month was reported to have brought the average price of a house to R857,400.

In real terms, year-on-year growth of 8,2% was recorded by Absa in November compared with a revised growth rate of 8,4% in October, based on the headline consumer price index. Average real year-on-year house price growth of 9,7% was recorded in the first eleven months of 2006.

"With CPIX inflation on a upward trend since mid-2006 and inflationary pressures still present in the economy, interest rates are expected to increase further by a total of 100 basis points in the first half of the the year.

" This will bring banks' prime and variable mortgage interest rates to a level of 13,5% by the middle of the year.

"Against the background of higher inflation and interest rates, real economic growth for 2007 is forecast to be somewhat lower than in 2006, which will also contribute to slower growth in real household disposable income this year," said Du Toit.

"In view of these developments and expectations, nominal house price growth is projected to continue its downward trend of the past two years for most of 2007.

"Year-on-year growth of about 9% in house prices is forecast for this year, with prices set to rise by around 3% in real terms. With interest rates forecast to move to lower levels again in 2008, house price growth is expected to improve and increase to above 10% during that year and into 2009," said the economist - I-net Bridge