South Africa’s home buying market remains resilient and continues to show better-than-expected annual house price growth.
The FNB HPI annual house price growth for February rose to 4.2% year-on-year, up from 3.9% in January, says FNB economist Siphamandla Mkhwanazi.
On a month-on-month basis, however, price growth continues to slow, probably reflecting the tapering of interest rate-induced demand.
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“This is consistent with Estate Agents Survey data, which showed ‘still strong’ but slowing buyer demand, mainly in the middle-priced segments of the market.”
Also, downscaling due to financial pressure continues swelling and the rental market remains under pressure, he says.
“Vacancy rates are climbing and rental escalations slowing. Anecdotal evidence shows that some of this stock is being released into the market for sale.”
Labour market weaknesses are also concerning as data shows that job losses are now migrating to more white-collar workers.
“Available data shows that lower-end prices remain relatively strong but are decelerating in line with the initial impact on labour markets. We expect this ‘correction’ to continue as employment takes time to recover,”
Mkhwanazi says, adding that the inherent stock shortages will probably keep property values afloat.”. “Indeed, estate agents operating in affordable segments still see demand outstripping supply.”