FNB Property Barometer - Feb 2024
Interest rates are expected to have reached their peak, with reductions anticipated in late 2024, potentially boosting property demand and prices in the second half of the year. This outlook is supported by projections of lower interest rates, improved growth, and continued job gains. However, there are inflation-related risks that could maintain higher borrowing costs, delaying the anticipated housing market recovery. Early 2024 shows positive housing market trends, but their sustainability remains uncertain.
Latest updates snapshot:
Home Loan Industry News:
Positive turn for home sellers in South Africa
BusinessTech:
In South Africa, house price inflation is almost flat, with slight growth expected due to increased demand. The FNB House Price Index grew by 0.7% in February. Market activity shows signs of recovery, with a decrease in selling time and a moderate improvement in estate agent sentiment, despite ongoing concerns about affordability and political uncertainty.
Five 2024 residential property trends that no one saw coming
Property Wheel:
ooba Home Loans anticipates positive shifts in South Africa’s residential property sector in 2024, highlighting trends like rising average house prices, increased demand for holiday homes in the Eastern Cape, the Free State’s popularity among first-time buyers, Limpopo’s property performance, and a climb in buy-to-let property investments.
Interest rates: The ‘most sensitive factor for the property market’
MoneyWeb:
Rob Kelso of SA Home Loans anticipates a residential market recovery in 2025 due to expected interest rate cuts. Despite current challenges, including a significant transaction decrease, the company remains optimistic about the future, highlighting a long-standing culture of homeownership and improving economic fundamentals in South Africa.
Bad news for homeowners in South Africa
BusinessTech:
Lightstone predicts South Africa’s residential property market will average below inflation in 2024, with house price inflation ranging from 1.8% to 3.5%. The best-case scenario assumes a GDP of 1.2% and core inflation of 3.5%. Luxury homes are expected to perform the best, but overall, property values may decline in real terms.
Good news for South African property investors
Daily Investor:
The spike in South Africa’s interest rates has led to a decline in property sales while boosting the rental market. The Seeff Property Group reports increased demand for rentals, particularly in affordable price bands, influenced by rising urbanization and weak economic conditions, despite potential risks in buy-to-let investments.
Property tax blow for homebuyers in South Africa
BusinessTech
Experts in the property market expressed disappointment over unchanged property taxes and the end of household solar rebates in the 2024 Budget. Concerns were raised about the impact on affordability and the missed opportunity to extend solar incentives, crucial for homeowners facing rising costs.
Rental market picks up the slack as property sales decline
IOL
Amidst rising interest rates and economic challenges, South Africa’s rental market has seen remarkable growth, with the Seeff Property Group experiencing a significant increase in rental demand across various price bands, especially in affordable and luxury segments, reflecting a shift towards rentals for affordability and reduced risk by potential buyers.
Major shift for South Africa’s property market is coming
BusinessTech
South Africa’s property market is anticipated to shift from a buyer’s to a seller’s market in 2024, driven by dropping interest rates and increasing transactions. Positive signs include a high rate of first-time buyers in 2023 and growing national enquiries, indicating a recovering market with a more optimistic outlook for 2024.
Bad news for home owners in South Africa
Daily Investor
South Africa’s house price growth stagnated in January 2024, with the FNB House Price Index showing a modest 0.6% year-on-year increase, mirroring December 2023’s growth. An anticipated upward trend in the second half of 2024 may signal a market recovery, as both demand and supply dynamics begin to improve.
Home buying activity expected to move ‘sideways’ in the near term
Property Wheel
South Africa’s property market anticipates a shift with the FNB Residential Property Barometer indicating a potential upward trend in H2 2024, despite a 28% drop in mortgage volumes and the lowest house price growth since the GFC in Q4 2023. Affordability improvements are expected, but a rapid rebound is unlikely.
Good news for complexes and sectional titles in South Africa
BusinessTech
Sectional title residential property prices have outpaced freehold home prices for the first time in 20 years, with a 1.9% increase in December 2023 compared to a 1.1% rise in freehold homes. This shift reflects a growing preference for sectional titles, attributed to factors like affordability, security, and lifestyle flexibility.
First-time homebuyers defy financial pressure, put down deposits of more than R120,000
IOL
South Africa’s first-time homebuyers are increasingly saving for higher deposits despite challenges, with the average deposit now at 10.9% of the purchase price. The average age and price for first homes have risen, reflecting a cautious but determined entry into the market amidst high interest rates and living costs.
Property Economics News:
Interest rates may have peaked, yet inflation risks loom amid promising growth ahead
REI:
In 1Q24, surveyed data shows modest improvements in housing market conditions. The FNB House Price Index growth decreased slightly to 0.7% y/y in February. Despite current challenges, expectations point towards a stabilising property market in 2H24, supported by projected lower interest rates, moderate economic growth, and incremental employment gains.
Standard Bank closing the taps
Daily Investor:
Standard Bank has tightened lending criteria due to deteriorating credit loss ratios and increased non-performing loans, influenced by high living costs and interest rates. This has led to reduced credit approvals and growth in loans, particularly affecting home loans and small business lending, while loans to large corporates and governments rose.
Interest rate trouble for South Africa
BusinessTech:
Global and South African interest rates remain high due to persistent inflation concerns. Despite initial optimism from US Fed Chair Powell’s comments, recent inflation data has dampened expectations for rate cuts. South Africa’s rate cuts are anticipated in the second half of the year, following the US’s lead.
South Africa’s middle class is in deep trouble
BusinessTech:
Eighty20’s latest Credit Stress Report indicates that while there’s a slight improvement in the financial status of South Africans, the middle class remains burdened with debt. The fourth quarter saw a mixed economic performance, with increased debt levels, particularly in unsecured loans, highlighting ongoing financial strain despite a decrease in loans in arrears.
Investors shift interest rate expectations for South Africa in 2024
BusinessTech:
Fund managers in South Africa anticipate interest rate cuts to begin in Q3 2024, delaying previous expectations for Q2. Optimism for the economy slightly improves, but high repo rates persist amid inflation concerns. The rand’s outlook weakens, with forecasts adjusting to a less favorable exchange rate despite some economic recovery projections.
Standard Bank sees interest rates at 7% until 2027
Daily Investor:
Standard Bank forecasts a gradual reduction of South Africa’s repo rate to 7.25% by the end of 2024, with a further cut to 7% expected to last through 2025 and 2026. Despite anticipated rate cuts, economic challenges such as load-shedding, Transnet’s performance, and national elections may maintain high interest rates longer.
Allan Gray shares 2024 interest rate prediction
Daily Investor
Allan Gray anticipates a modest rate-cutting cycle for South Africa, with the repo rate decreasing by 1% to 7.25% by end of 2025, remaining 1% above pre-Covid levels. This reflects concerns over inflation risks, including high food prices and structural economic issues like load-shedding and logistical constraints.
Another blow for interest rates in South Africa
BusinessTech
The latest FOMC minutes suggest a delayed start to US interest rate cuts, potentially affecting South Africa’s timeline for reducing its 14-year high rates. The South African Reserve Bank may only cut rates after the US begins its cycle, aiming to maintain the interest rate differential and stabilize the rand.
Interest rate relief coming for South Africans
Daily Investor
Standard Bank forecasts four interest rate cuts by the SARB in 2024, totaling 100 basis points, bringing the repo rate to 7.25%. Despite these cuts, high previous hikes mean rates will stay near historic highs, with predicted subdued economic growth of 1.2% amid domestic challenges and upcoming national elections.
Interest rate pain won’t go away in South Africa
BusinessTech
The South African Reserve Bank (SARB) is anticipated to start reducing interest rates in 2024, though cuts are expected to be modest. Despite a challenging inflation landscape, notably in the food sector and amid logistical challenges, the market expects a decrease from the current 8.25% to 7.3% by the end of 2025.
When interest rates will finally be cut in South Africa
BusinessTech
The SARB may cut interest rates in 2024, but timing remains uncertain, with possible commencement in the second half of the year. Economic factors, including a vulnerable rand, geopolitical tensions, and biosecurity risks, contribute to a cautious approach, leading to expectations of a shallow cutting cycle compared to pre-pandemic periods.
Inflation pulls back more than expected
BusinessTech
December 2023 saw South Africa’s CPI inflation ease to 5.1%, lower than the expected 5.2%, and down from November’s 5.5%. Despite this decrease, annual inflation averaged 6.0% for 2023, within the SARB’s target range but expected to rise early in 2024 before returning to a mid-point target of 4.5%.
Reports:
Industry Reports
History of published reports. including FNB Property Barometer and Eighty 20 Credit Stress Report