SA's property market is showing signs of steady growth, with the latest FNB house price index showing a 0.8% year-on-year increase in November, following a revised 0.9% (from 0.3%) rise in October.
Recent revisions are based on updated deeds data from Gauteng, and align with FNB's internal valuations. The data now suggests house prices troughed in June, matching FNB’s expectations and coinciding with signs of improving market sentiment and recovery.
According to senior FNB economists Siphamandla Mkhwanazi and Koketso Mano the recent uptick was consistent with other market indicators, such as the FNB third quarter estate agents survey, which indicated a surge in activity, particularly in key regions such as Gauteng and the Western Cape, coupled with a reduction in the time it takes to sell property.
“Furthermore, expectations of near-term activity were robust due to improved sentiment and expectations of further rate cuts. Lower borrowing costs are expected to stimulate demand in lower-priced segments, where affordability remains a constraint,’ the economists said.
However, a historical comparison of real house prices with market strength indices real house prices should be higher. The divergence suggests that although buyer interest has risen, market dynamics have not been strong enough to drive substantial increases in property values.
“As we emerge from the cost-of-living crisis, current trends suggest buyers remain cautious, prioritising affordability. Indeed, mortgage extensions remain subdued, averaging 2.8% year to date, down from 5.7% in 2023," Mkhwanazi said.
Pam Golding CEO Andrew Golding said overall sentiment had improved, and the two recent repo rate cuts totaling 50bps had started to effect the residential property market. This led to increased demand, particularly in the lower- to middle-market segments, while also boosting confidence and activity in the luxury property sector.
For Pam Golding this was borne out by the fact that November was a busy month, with group sales 19% ahead of transactions successfully concluded in November 2023, Golding said.
“Furthermore, the banks continue to support the market with competitively priced loans, lower deposits and elevated approval rates, while investors and homeowners will be buoyed by the fact that according to the Pam Golding residential property index, house price inflation in October 2024 of 5.0% — compared to consumer price inflation of 2.8% — translates into real growth in the house price index of2.2%,” he said.
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