FIRST National Bank expects to see a move back to house price inflation as 2010 approaches.
This comes after the bank's house price index for October showed a year-on-year average price deflation of -1%, economists said.
According to the FNB property division the decline was expected, as informed by its property barometer survey of estate agents.
Property strategist for FNB home loans John Loos said this symbolised a "moderate" relief for potential home buyers but was not as "bright" as it was in the previous years.
"The banking sector will relax a bit on lending criteria, and we can also see that the household sector is currently sitting on high debt levels but the deflation will assist new buyers with the ability to acquire credit," he said.
He said for the time being, the possible end of interest rate cutting should not derail the property recovery.