This brought the average price of a house in the middle segment of the market to about R752,300 in the first month of the year.

In real terms, year-on-year growth of 11,5% was recorded in December compared with a revised growth rate of 12,3% in November, based on the headline consumer price index, Absa said.

The average real year-on-year growth in house prices was 18,1% in 2005, which is based on an average headline CPI inflation rate of 3,4% last year.

On a month-on-month basis, nominal growth in house prices came to 1% in January compared with a revised growth rate of 1,2% in December.

Real month-on-month growth of 1,1% was recorded in December last year.

Based on the current mortgage interest rate of 10,5% and the average price of a house in January this year, the monthly mortgage repayment and the gross monthly income required in order to afford a 100% mortgage, were 11,2% higher in the past month compared with January 2005 when the rise was 26,8%.

Although housing is, in general, still less affordable than a year ago according to this analysis, the rate of deterioration has decelerated significantly during the course of the past twelve months, Absa said.

Absa added that lower nominal house price growth of between 10% and 12% is projected for 2006, with the affordability of housing continuing to play an important role.