The average price of homes transacted in February was R1.099million, indicating price deflation of 0.79%
Improved national sentiment has not yet impacted house prices, with February’s growth lower than the previous three months. Better growth is, however, expected in the coming months.
The FNB House Price Index has revealed year-on-year growth in February was 2.3%, down from 3.8% in January and the high of 5% reached in November. However, the bank’s John Loos says this does not alter its view that this year should be a “mildly stronger” housing market than last year.
“We believe weak house price growth in early-2018 is reflective of weak sentiment and market conditions late in 2017 still feeding through with a lag. But, with sentiment appearing to be much improved early in 2018, we expect economic growth in 2018 will pick up, interest rates remain stable, or even decline slightly, and housing demand should be a little stronger, all creating mildly stronger house price growth in 2018.”
The index also found the average price of homes transacted in February was R1.099million, indicating price deflation of 0.79%.
This same “negative sentiment” was reflected in FNB’s Estate Agent Survey Activity Rating through 2017, Loos says.
In the survey, agents are asked to rate their perceptions of market activity on a scale of one to 10. By the fourth quarter of last year, the rating was 5.29, down from a multi-year high of 6.78 reached in early-2014.
“Agents also reported a steady rise in the average time of homes on the market to a multi-year high of 17 weeks and two days by the final quarter of 2017, from less than 12 weeks early in 2016.”
“However, we remain of the expectation that 2018 will be a mildly stronger year for the housing market and house price growth, projecting a 4.8% average growth rate for 2018 after a lower 3.8% for last year,” Loos says.
“Business confidence appears to have been boosted by the leadership change, and by the composition of President Cyril Ramaphosa’s cabinet, especially by the return of business-popular ministers Nhlanhla Nene and Pravin Gordhan. The rand continues to perform solidly, a reflection of improved sentiment, and it is likely consumer confidence will move in a similar direction.”