The FNB House Price Index growth averaged 0.7% year-on-year in February, slightly lower than the 0.9% in January, and the low levels of house price appreciation should persist in the near term, says FNB senior economist Siphamandla Mkhwanazi.
This was because of still elevated living and borrowing costs, as well as heightened political uncertainty, both domestically and internationally, he said at the release of the index yesterday.
However, FNB’s base case view suggested the house price cycle had bottomed, and a gradual decline in inflation and borrowing costs from the second half of 2024, with some employment gains, should modestly stimulate demand in the interest-rate sensitive segments over the medium term, which would support a moderate uptrend in house prices
Surveyed data showed that buying activity had trended higher in the past few months, and there had been a reduction in the time it takes to sell a property.
“However, there is still a great deal of uncertainty around the sustainability of these improvements. This reflects agents’ lingering concerns around affordability, political uncertainty, and lack of job security,” said Mkhwanazi.
He warned that risks to the inflation outlook were skewed to the upside, and should they materialise, borrowing costs may remain high for longer than the bank currently anticipated, which could delay the expected recovery in housing markets. – Staff reporter