Senior writer
The Q2 Absa Homeowner Sentiment Index reveals that overall consumer confidence in the South African property market increased by 2pp to 84% from 82% in Q1 2024.
It believes this is driven by the perception of property as a secure asset that will create sufficient wealth in the long term. This signals the resilience of South African consumers and a deep sense of optimism about an upturn in property market activity in the medium to longer term.
Main drivers of positive sentiment: | Main drivers of negative sentiment: |
45% believe it depends on the location of the property | 61% are concerned that the economy is unstable |
54% believe property always increases in value | 50% are concerned about the political instability in South Africa |
53% believe that property creates long-term income | 37% are concerned about crime levels |
45% believe there is a high demand for rental properties | 49% are concerned about high unemployment |
46% are concerned that property has become very expensive | |
40% are concerned that buying power has decreased |
Buy sentiment
70% of respondents responded positively, as opposed to 72% in the first quarter of 2024.
Buy sentiment improved significantly, by 12%, compared to Q2 2023. Buy sentiment has been on a consistent downward trend since the upturn in the interest rate cycle in Q4 2021, but consumers are starting to signal their intent to buy property.
What respondents had to say
“I decided to buy a house recently due to financial stability and investment opportunities, as well as to meet personal and family needs. The location was ideal, and favourable market conditions make it a timely decision.” (Male, 35-44yrs, >R30k PM).
“Because it gives me a sense of security, and it’s an investment.” (Female, 25-34 years, >R30k).
“I wanted to get an asset that I can keep forever for my family”. (Female, 25-34yrs, >R30k).
“Rent was too expensive and I needed more space. I had the funds so I decided to move forward with buying a house.” (Female, 18-24 years, <R15k).
Sell sentiment
The sell sentiment declined slightly, by 2% to 47% in Q2 2024, compared to Q1 2023, but was 4% higher than in Q2 2023.
Sellers feel less optimistic that they can get the price they want for their properties and that they would rather wait if they don’t have to sell. Some (41%) say that if a property becomes unaffordable, it is better to sell. This is mainly due to perceptions around a struggling economy. For those who support selling, the perception of selling being more straightforward has improved since Q4 2023.
“I think this past year was finally the right time for me to jump on the investment property bandwagon. A few things really pushed me to make a move. One was definitely the potential for appreciation. Everyone keeps talking about how real estate prices just keep going up, and honestly, I don’t see that changing anytime soon. Especially with inflation the way it is, I wanted to invest in something real, something that would hold its value.” (Male, 35-44 years, >R30k).
“This is a long-term investment for me, I feel it makes money for me in my sleep essentially. I get to bring back all the money I put without forgetting the risks that comes with it”. (Female, 25-34 years, <R30k).
Buy versus rent sentiment
The buy vs. rent sentiment (potential future buyers who are currently renting) declined by 2% to 71% in Q2 2024 compared to Q1 2024 but increased by 10% compared to Q2 2023.
Many respondents said that they have now saved enough to afford a deposit for a home, while others want to buy because they are relocating and finding new opportunities. For those who still prefer renting, the flexibility this option provides remains attractive.
“Had to sell my house and downgrade as we could not afford the repayments and we could do with a smaller place”. (Male, 45-54 years, R15 – R29K).
“We sold our house and are currently only renting to get back on our feet financially before considering buying a new house in the future”. (Female, 25-34 years, R15- R29K).
Invest sentiment
The investment sentiment declined by 2% to 80% in Q2 2024, compared to Q1 2024. This is
the highest level this sentiment has averaged since Q1 2021 and indicates that property investors still feel it is an opportune time to invest for future value and returns. When asked whether it is a good time to invest, 9% of respondents were less negative than the previous quarter.
Regional sentiment
The sentiment to buy property decreased by 2% inland and slightly down (1%) in the coastal region. Leading negative drivers for sentiment in both regions remain high interest rates, cost of living and the economy not performing well.
Sentiment to sell property remained unchanged at 50% inland Q1 2024 but increased by 4% in the coastal region. In both regions, mentions are still that the economy is still not performing well.
Sentiment to invest in property increased by 5% inland and 7% in the coastal region. Respondents in both regions are confident that there will be a high demand for property in the future and that you will be able to make a good return. Negative factors, such as the economy in general and that prices are still too high, seem to remain.
Region | Q4 2023 | Q1 2024 | Q2 2024 |
Free State | 73% | 82% | 71% |
Gauteng | 68% | 72% | 72% |
North West | 63% | 68% | 67% |
Limpopo | 73% | 72% | 74% |
Mpumalanga | 74% | 81% | 79% |
Western Cape | 62% | 71% | 70% |
Eastern Cape | 68% | 68% | 69% |
Northern Cape | 63% | 59% | 66% |
Kwa-Zulu Natal | 66% | 74% | 71% |
The report concludes
Uncertainty around the property market seems to have subsided in the longer term as consumers indicate that they feel better times are on the horizon.
However, in the short term and for the time being, consumers still feel the pain, not wanting to commit themselves at this point.
In general, sellers want a good and fair price for their homes. On the other hand, buyers and investors are looking for a good deal and yields and returns.
All current indicators tell us that property price growth is negative in real terms as a slight mismatch between willing sellers and buyers begins to emerge.
Homeownership remains aspirational and a desirable investment for South Africans. It is often a long-term goal and many mention having to save and spend sparingly before
buying a property and would rather postpone this decision in the short term.
The outlook for consumers in the short term remains strained, and it may take some time to ease, although inflation is expected to ease further towards the end of 2024. Interest rate levels are expected to improve for indebted consumers by the end of 2024 by 25bps, which will bring much-anticipated relief and improve cashflows.
Read the full report here.