Both consumer and business confidence should remain high, with the factors supporting consumer confidence in 2005 still effective in 2006 – healthy disposable income, structural changes in the economy, and still low nominal interest rates. Money supply and credit extension should witness a mild moderation, alongside growth in the housing market. We have noted signs of cooling off already.
Expectations of interest rate increases are likely to dampen credit demand (mortgage financing) somewhat. However, certain country-specific factors are likely to support still high and positive rates of growth, namely, the participation of nonresident buyers in the local market, the emergence of a new middle class, strong consumer demand, and a general catching up in the local housing market with international developments.