The latest data from the FNB House Price Index indicates a marginal growth of 0.7% in February, a slight decrease from the revised 0.9% in January 2024. While house price inflation in South Africa remains relatively flat, there's a glimmer of hope for sellers as a surge in demand is anticipated in the coming months.
FNB highlights that despite the prevailing economic challenges such as elevated living costs and political uncertainties, there's a positive trajectory expected for the housing market. They suggest that the current phase of subdued house price appreciation is likely to persist in the short term, but signs indicate that the cycle has bottomed out. Factors such as declining inflation and borrowing costs, coupled with modest employment gains, are poised to stimulate demand in the near future, particularly in interest-rate-sensitive segments, thereby supporting a moderate uptrend in house prices.
According to the latest FNB Estate Agents Survey, market activity has exceeded previous expectations, with the market activity rating increasing from 5.3 to 5.8 in the first quarter of 2024. This upward trend suggests that the downturn in home buying experienced between the second and third quarters of 2023 has reversed, signaling a path to recovery. However, it's noteworthy that the current rating still lags behind the long-term average and previous peaks, indicating room for further growth.
Regional analysis reveals varying degrees of recovery, with the Eastern Cape showing the strongest rebound, followed by notable increases in the Western Cape, Gauteng, and KwaZulu-Natal. These improvements in market activity are also reflected in the reduced time it takes to sell a property, with the average days on the market decreasing from 81 to 76 days in the first quarter of 2024. Although KZN experienced a slight increase in days on the market, overall, the trend indicates a positive shift favoring sellers.
The uplift in market conditions has resonated among real estate agents, with a notable increase in satisfaction levels from 49% to 56% in the first quarter of 2024. However, this positive sentiment is not uniform across regions, as evidenced by a decline in sentiment in KZN following two quarters of recovery.
Despite these encouraging developments, there's a note of caution regarding the sustainability of increased activity in the near term. FNB reports that only 38% of respondents anticipate a further increase in activity in the second quarter of 2024, citing concerns around affordability, political uncertainty, and job security.
In summary, while the South African housing market continues to grapple with various challenges, the recent trends suggest a positive turn for home sellers, fueled by an anticipated uptick in demand and improved market sentiment. However, ongoing economic uncertainties necessitate vigilance and adaptability within the industry.
