26 November 2024
The outlook for South African residential property remains positive with 84% of respondents surveyed in the Q3 Absa Homeowner Sentiment Index (HSI) indicating their confidence in the future of the market.
This barometer of consumer sentiment maintained the same score over the last two quarters, indicating an ongoing cautious optimism among South Africans. The central bank has delivered two much-anticipated interest rate cuts after a significant hiking cycle which left many consumers under financial pressure, opting to delay property purchases.
“While interest rates are expected to improve even further in coming months, the economic circumstances of consumers in the short term remains strained,” said Nondumiso Ncapai, Managing Executive at Absa Home Loans. “It will take some time for consumers to recover financially, as lower interest rate levels are only expected to bring tangible relief and improve cashflows in coming months,” Ncapai said.
This cautious optimism comes as house price indices, including the Absa House Price Index, which are tracking on low single digits in nominal terms, show incremental improvement over the past 12 months – a positive indicator signalling the imminent recovery of the market.
Research findings
- The sentiment to buy improved by 6pp to 73% compared to Q3 2023 and has been steadily increasing since earlier this year.
- The sentiment to sell improved by 2pp to 48% compared to a year ago, signalling the cautious optimism of sellers who, while adopting a wait-and-see approach, anticipate better house prices on the way.
- The confidence of potential buyers who are currently renting – or the buy-vs-rent sentiment – increased by 2pp to 83% in Q3 2024 compared to the previous quarter and is up 4% from Q3.
- The sentiment to invest remained at 80% in the third quarter but was up 3% from Q3 2023 for in anticipation of future value and returns.
- The sentiment to renovate declined by 1pp to 79% compared to Q2 2024 but is still trending upward since the start of 2023. It has increased 4% since Q3 2023.
Emerging trends
- Consumers from coastal regions showed poorer confidence in the property market across most metrics in Q3 compared to the previous quarter. This while their inland counterparts showed growth in confidence across four out of these six metrics quarter on quarter.
- Renting out properties for a secondary income continues to be an emerging trend, especially in the short-term rental segment, with renters enjoying the flexibility and affordability this form of housing provides.
- Feedback from respondents reflect an increasing optimism that it is time to buy and enter the market. This could further strengthen the growth observed across first-time homeowners.
“The majority of South Africans who currently apply for home loans are first-time buyers. Many of these consumers are hungry for a better financial and property guidance in order to make more effective and informed decisions,” Ncapai said. “This subsegment displayed greater optimism in the future of the property market in Q3 compared to repeat buyers.”
Now celebrating its tenth year, the Absa HSI is a leading indicator of the overall state of consumer confidence in South Africa's property market. This revamped edition offers a deeper analysis of real estate participation, provides more localised insights for each province, and introduces findings on emerging trends such as consumer interest in APS, investment factors for these technologies and their preferred financing options for homebuying.
