FNB House Price Index: Signs of Housing market slowdown with glimmer of hope
The FNB House Price Index edged up to 0.5% y/y growth in June, a slight improvement from 0.3% in May. The low house price growth trajectory aligns with expectations given the persistent high living and borrowing costs. Notably, lower-priced segments and non-metro regions continue to perform better.
Market strength indicators suggest a potential stabilisation in supply and demand dynamics, following a period of decline. We maintain a cautiously optimistic outlook for the remainder of the year. Slower price increases and the possibility of interest rate cuts support the bottoming out of buying activity. Additionally, if the new administration implements pro-growth policies, lower interest rates could further support potential buyers and lead to a revitalised housing market.
2Q24 Estate Agent Survey Highlights:
• Market activity is low due to election jitters and affordability concerns. However, the reading is above the most recent lows, which suggests that a potential bottoming out occurred between 2Q23 and 3Q23.
• Affordable housing segment is a bright spot with higher activity. Buying activity in this segment appears to be further supported by a search for less expensive properties, as elevated interest rates and stricter lending standards stretch affordability for many.
• Regional variations exist, with Eastern Cape and KwaZulu-Natal showing improvement. While this emphasises the uneven impact of economic factors across different regions, it also highlights structural constraints and a recovery following civil and climate-related disruptions.
• As a result of lower activity in 2Q, selling times are longer, at an average of 12 weeks and 2 days, up from 10 weeks and 2 days.
Overall, the Estate Agents Survey paints a picture of a housing market in cautious mode. Affordability concerns, election anxiety, and high interest rates dampened activity and agent sentiment in Q2. However, the resilience of the affordable housing segment and pockets of regional strength offer some tentative signs of hope.
