The South African residential property outlook remains positive with 84% of respondents surveyed in the Absa Homeowner Sentiment Index (HSI) for the third quarter of 2024 registering their confidence in the future of the market.
Having maintained this score for the last two consecutive quarters, the index reflects a significant and ongoing cautious optimism among South Africans regarding property investment.
This optimism follows a critical period of financial strain imposed on consumers during an extended interest rate hiking cycle. In response to these hardships, the South African Reserve Bank has initiated two anticipated interest rate cuts, marking a critical shift that many hope will alleviate the pressure faced by potential homeowners.
“While we expect interest rates to improve further in the coming months, the economic circumstances for consumers remain strained in the short term,” said Nondumiso Ncapai, managing executive at Absa Home Loans.
“It will take time for tangible relief and improved cash flows to manifest.”
Within this climate of cautious optimism, the Absa House Price Index indicated incremental improvements in house prices over the past 12 months, a sign of a potential market recovery.
Notably, sentiment towards purchasing homes has surged, with a 6 percentage point increase in the inclination to buy, now standing at 73% as compared to last year.
Interestingly, the willingness to sell has also improved, climbing 2 percentage points to 48%. This indicated that sellers were beginning to anticipate better market conditions and potential price improvements, though many continue to adopt a watchful, wait-and-see approach.
Among future buyers, confidence among renters was also on the rise, with 83% expressing a strong preference to transition from renting to homeownership, an increase of 2 percentage points since the last quarter.
Furthermore, investment sentiment remains steadfast at 80%, indicating that consumers are eager to seize anticipated future value in property.
However, a slight decline was noted in sentiment towards renovating properties, which decreased by 1 percentage point to 79%. Despite this, renovation trends have increased 4% since last year, suggesting a long-term positive trajectory.
Geographically, the data revealed emerging trends revealing a disparity in confidence levels, with consumers in coastal regions exhibiting lower sentiment across most metrics compared to their inland counterparts, who showed growth on four out of six measures in this quarter.
Renting properties as a supplementary income source was becoming a notable trend, particularly in the short-term rental market, as this flexibility appealed to many consumers seeking affordability.
The feedback from the survey indicated that numerous respondents believed it was a prime time to invest in the property market, which could stimulate further growth among first-time homebuyers.
Ncapai said first-time buyers now constituted the majority of South Africans applying for home loans.
“These individuals are eager for better financial and property advice to make informed decisions,” she said, emphasizing the optimism that this demographic displayed compared to repeat buyers.
As the Absa HSI reaches its 10th anniversary, it offers an enriched analysis of consumer sentiment, providing localised insights across provinces and introducing findings on emerging innovations, such as Advanced Property Solutions (APS), which highlight shifting investment preferences and financing methods in home buying.
Meanwhile, the Clur Shopping Centre Index reflects a changing economic landscape, revealing that the gap between rental growth rates at South African shopping centres and the consumer inflation was closing.
Belinda Clur, managing director of Clur International, said rental growth rates in September for the Clur All Centres Index were at 3.7%, only 0.1% below relative inflation of 3.8%.
“This overall position has been driven by a continued retreat in domestic inflation, a solidification in rental growth at above 3% over 2024 and a further contraction in annualised trading density growth in Q3 ‘24,” she said.
BUSINESS REPORT