South Africa’s housing prices rose for the second straight year in 2013 as interest rates remained low in the market, but analysts forecast reduced number of deals this year as home buyers hold back if the Reserve Bank fails to cut rates as expected.

The FNB Housing Price Index showed that prices rose by an average 6.8 percent in 2013, slightly lower than the 7.1 percent gain recorded in 2012. The rise last year was however better in real terms considering that inflation during the period was much lower.

Real estate experts told newstonight the rising prices trend was encouraging as the prices have continued to rise for second year in a row.

Average house price was  $89,198 in 2013 against $83,548 the previous year.

Analysts said end users could shy away from buying new homes this year if the South African Reserve Bank leaves interest rates unchanged in the face of higher inflation as widely expected. Real estate sector depends on interest rates to a large extent.

Newstonight said data released by National Credit Regulator has shown positive trend in lending for real estate sector in previous few quarters, which corresponded with an increase of 3.2 percent in residential housing projects completed during first 10 months of last year.

If the economy stays positive in 2014, real estate developers are confident of a more than 6 percent  rise in real estate valuations. Real estate developers have also shown confidence in economy and are planning new projects in year 2014, newstonight reported.