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National mood in SA property market shifting - survey

Jan 23 2018 22:00
Carin Smith

Cape Town - The national mood in the SA property market has changed significantly since the fourth quarter, according to the latest FNB Home Buying Estate Agent Survey.

The report points out that 2017 was the third consecutive year of weakening in the SA residential property market. It states that this was expected after economic stagnation since about 2012 and amid weak business and consumer confidence. There were mounting concerns about future political and economic policy direction in the country.

John Loos, household and property sector strategist at FNB, explained that estate agent expectations were modest through 2017. The estate agents surveyed said they felt the "national negativity” reflected in the housing market last year.

About 95% of sellers had to drop their original asking price in the fourth quarter.

The survey shows the average time of homes on the market increased to 17 weeks and 2 days in the fourth quarter compared to 11 weeks and 1 day at the start of 2016.

According to the survey report, this suggests that current demand levels are still insufficient compared to the available supply of properties on the market.

Slightly better picture

Loos, however, believes the survey for the first quarter of 2018 could show a slightly better market picture emerge. This is because the change in ANC leadership in December took place after the fourth quarter survey was done. Deputy President Cyril Ramaphosa was elected as president of the ruling party.

"While it remains to be seen what such a change will mean policy-wise for SA, if the strongly positive reaction of the rand to [Ramaphosa's election] is anything to go by, the national mood appears to have improved on the news," states the report.

Loos foresees that an improved economic growth rate, accompanied by FNB's expectation of stable interest rates, should support mildly stronger household sector disposable income growth. This in turn should provide some additional support to housing demand.

The FNB House Price Index could also have begun to show early signs of market strengthening very late in 2017, Loos pointed out.

When it is viewed on a month-on-month (m/m) basis and after adjusting for seasonal factors, one sees that, after a lull in price growth in mid-2017, there was some sort of late “pick-up” in December, he explained.

However, he pointed out that it is too early to tell how sustainable such a m/m lift is.

He foresees that, despite estate agents not yet reporting actual improvement in the market on a national average basis, 2018 should bring about a slightly stronger housing market.

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fnb  |  sa economy  |  money  |  property


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