Great if you're buying this year - not so much if you're selling

The Lightstone house price forecast for 2017 is out, and it's looking great - if you're a buyer.

For sellers, the news is not that good: the forecast shows current homeowners are continuing to lose real value on their properties.

Lightstone is predicting a downward trajectory with slow to sluggish growth in house prices of between 0.2% and 2.3%.

Nationally, house price inflation dropped to 3.4% in 2016 from 5.3% at the end of 2015.

The downward trend is notable, but digging a little deeper into that number reveals an even more interesting statistic, says Paul-Roux de Kock, analytics director at Lightstone.

There was a significant divergence between 2016's house price inflation figures in the Western Cape (8.7%) and Gauteng (2.5%).

Usually these are the two leading provinces, but Gauteng really dropped last year.

"The trends divergence from the other provinces' inflation in the Western Cape is driven largely by sales in Cape Town, and it could be closely linked to increased migration to the Western Cape," says De Kock.

This is an important trend to factor into any forecast, he says, as it suggests provincial house price estimates might differ substantially, not only by value band but also by province.

In its prediction Lightstone found that mid-value and luxury prices were on a downward trajectory, while the low-value segment was still rising, effectively lagging behind the national trend (in line with the trend).

Based on the downward movement in 2016 of the mid-value and luxury bands, which serve as leading indicators, Lightstone strongly believes national house price inflation will follow the same trajectory in 2017 to get to its estimation.

"To start nailing some numbers down, we need also to look at what's happening in the economy as a whole," says De Kock.

The economic outlook for 2017 remains pretty bleak with estimated economic growth ranging between 0.6% and 1.2%.

Consensus seems to be on inflation (CPI) settling at about 5.5% for the year, which should leave interest rates unchanged.

However, as we all saw in the not-so-distant past, figures like these are never cast in stone.

So Lightstone created three scenarios - based on assumptions around CPI, GDP and interest rates - to generate a low-level, expected and high-level forecast for house price inflation in 2017 to get to its predictions.

The scenario modelled predicted that house price inflation would end 2017 at 0.2% in the low-level forecast, 1.3% in the mid-level and 2.3% in the high-level forecast, depending on economic factors.

De Kock adds "inflation of around 1.3% is the most likely scenario, continuing the year-on-year downward trend that has seen the house price inflation index dropping dramatically in the past two or three years".

"As to when the trend will start to reverse, there are no indicators to help with that prediction. Inflation in the luxury price brand is still dropping.

"Until we see a turnaround there, we should expect the current downward trend to continue. Good news if you're buying. Less exciting for sellers."