Absa’s Homeowners Sentiment Index lifted unexpectedly in the first quarter, this at a time when many other property indicators are still well down because the weak economy and high interest rates have blunted demand.
Overall sentiment among respondents surveyed by Absa climbed 4% from the final quarter of 2023, to 82%, and by 9% when compared with a year ago, as optimism began to re-emerge, Nondumiso Ncapai, Absa Home Loans managing executive, said in a statement yesterday.
This is in contrast to other data indicators, with, for instance, the latest Rode’s Report finding that nominal house prices grew only 0.8% over January and February compared to the same period in 2023, which implied that prices continued to fall significantly in real terms. Rode’s forecast nominal house prices to grow slower in 2024 than in 2023.
The most recent FNB House Price Index growth averaged only 0.7% year-on-year in February, slightly lower than 0.9% in January. FNB senior economist Siphamandla Mkhwanazi said at the time, however, their base case view suggested the house price cycle might have bottomed, notwithstanding the uncertainty from a range of factors in the market.
“Respondent verbatims indicate they feel slightly more confident to buy in respect of overall financial position and affordability. The main drivers for buying sentiment include growing families and the need for more space,” said Ncapai about the latest survey.
The index also indicated healthy growth in sentiment across investors surveyed, surging 6% quarter-on-quarter. This was the highest score recorded in the index’s investor sub-category in three years, said Ncapai,
“These figures indicate consumers and investors are increasingly optimistic about the property market's prospects, anticipating better days ahead,” said Ncapai.
“While risks remain, sentiment around the property market’s future returns is promising, reflecting what we have known to be true in South Africa for many years – property remains an aspirational and desirable investment,” said Ncapai.
Sentiment to buy property grew 8% to 72% compared to the previous quarter and 11% compared to the first quarter of 2023, “an inflection point in what has been a downward trend since the final quarter of 2021,” Absa said.
There was a notable increase in positive sentiment among first-time homebuyers. Also, there was a big uptick among women who considered it more appropriate to buy rather than rent, in the first quarter.
“The security of property as an asset, consistent appreciation in property values over time, and the creation of long-term income were among the main factors cited by respondents concerning the attractiveness of property as an investment class,” Ncapai said.
This, while a challenging economy, political instability, crime, high unemployment rates and escalating property prices were identified by respondents, as significant barriers to market enthusiasm.
She said positive signals in the market in the first quarter showed that consumers were gearing up for better times even though interest rates were now expected to remain higher for longer than expected at the start of 2024, extending the time anticipated for a full recovery of the property market.
BUSINESS REPORT