Promising signs for an uptick in activity in SA’s housing market
As anticipated, the Reserve Bank’s Monetary Policy Committee last month kept the repo rate steady, taking a conservative approach against the backdrop of rising fuel prices, and with a wary eye on CPI inflation, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
“However, a reduction in the repo rate, on the back of the market-friendly election outcome, would have created stimulus for the economy and property market, as well as a confidence boost for consumers in general, especially homeowners and buyers with outstanding mortgages and hefty bond repayments.
“Having said that, and based on the Pam Golding Residential Property Index April statistics, it is encouraging to see that the national housing market already appears to be starting to see promising signs which augur well for an uptick in activity now that the dust has settled on the election.”
Dr Golding says good news is that the slowdown in national house prices appears to be bottoming out, with national house price inflation steady at 3.7% in both March and April. “We believe the stabilisation and potential for a turnaround in the national market is being driven by a combination of a gradual strengthening in Gauteng and a tentative rebound in the Western Cape region, which had experienced a price correction. Despite this, the Western Cape remains the top performing major region overall, with the strongest regional price growth (6.75%) across all price bands. Interestingly, the East Rand continues to enjoy a modest rebound and is currently the top performing Gauteng market.
“Given that the above statistics are for the pre-election period, this is a positive indicator which makes the case for a turnaround even stronger – as after each of the five general elections held since 1994, the SA housing market has experienced a rebound of varying degrees during the subsequent 12 months. So, if history does indeed repeat itself, and given that much of the uncertainty which has been hanging over the market is finally removed, activity and price growth are likely to recover – more noticeably after the seasonally quiet winter months – and the residential market should soon begin to strengthen on a broader scale.
“Notably, and as reported by FNB’s May Property Barometer, the uptake of homes by first-time buyers continues to gather momentum, now an estimated 22.7% in Q1 2019 compared with 17.6% in Q1 2018. With affordability and value key factors among the swelling ranks of first-time buyers in particular, promising news is that first-time buyers are returning to the market in Cape Town, prompted by the recent price adjustments, as well as the compelling desire to gain a foothold in the market, with the latter trend also evident in KZN.