FNB recently released their latest Residential Property Barometer with insights gleaned from estate agents around the country. We’ve gone through the data so that you don’t have to.
The big picture
Buying is slowing down. According to the Barometer the annual growth in the FNB House Price Index moved slightly lower in January, to 2.7% y/y from 2.9% in December. The segmented data shows that the slowdown is broad-based across price segments and major cities. The slowing price growth trend reflects relatively softer demand amid higher living costs and deteriorating affordability. We anticipate house price growth of around 2% this year, versus 3.5% and 4.2% in 2022 and 2021, respectively. They expect price growth to start lifting in the second half of 2024 as interest rate pressures ease and marginal buyers return to the market.
Here are the key takeouts:
How long are properties staying on the market?
There’s a bit of good news in that the length of time properties are on the market has decreased slightly from 71 days to 69 (or nine weeks and six days). By region, the Western Cape had the shortest time on the market at 55 days, followed by Gauteng at 69, the Eastern Cape at 73 and KZN at 79 days.
In terms of price range, properties priced between R1.6m and R2.6m have spent the shortest amount of time on the market at 60 days. Properties priced between R2.6m and R3.6m had the longest time on the market at 84 days.
Which price brackets are the most active?
The Western Cape comes out ahead again with a rating of 7.0 (out of 10), followed by the Eastern Cape, Gauteng and KZN. Affordable properties seem to be in highest demand with the the R500k-R750k price bracket was the most active during the fourth quarter.
Why are people selling?
In terms of the affordable market segment an estimated 30% of sales were attributed to financial pressure. This indicates the impact of the sharp increase in debt servicing costs, which should have a more pronounced impact on lower-income households.
Conversely, emigration-related sales remain steady at 8%, significantly lower than the peak of 18% observed in 2019. There has also been an uptick in relocation within South Africa, increasing from 8% in 1Q20 to 14% in 4Q22, which aligns with the shift in housing preferences resulting from the working from home trend.
At the upper end of the market the bulk of sales were attributed to downscaling due to lifestyle changes, followed by relocation.
Notably, incidents of upgrading have slowed recently, from a peak of 17% in 2Q21 to 12% in 4Q22.
