Best news in 10 years for property in South Africa
Category The Property Market
As of the last quarter of 2024, consumer confidence in South Africa's property market had reached its highest point in ten years.
This is according to Absa's latest Homeowner Sentiment Index, a barometer of consumer confidence across six key metrics in the country's housing market.
The survey, which sampled over 1,200 participants who earned an income and came from metropolitan areas, cities, and towns, also showed growth across all its measurement categories.
The report highlighted that South African consumers are confident in the future of residential property, with sentiment climbing to 87% in the final quarter of 2024.
Additionally, 77% of respondents said they were confident in buying rather than renting, up 4% from the previous quarter, driven by the belief that it is more beneficial to own a home than rent one.
"These levels recorded are the highest in a decade with the dominance of first-time buyers in the market relative to other segments and an ongoing trend," the report said.
"This result bodes well for the outlook of the property market into 2025 and is indicative of the resilience of South African consumers who are optimistic even as they emerge from the burden of a protracted cost-of-living crisis," said Nondumiso Ncapai, Managing Executive at Absa Home Loans.
The index also showed that sentiment to buy and invest in the property returned strong results in Q4 2024.
Additionally, confidence to sell surpassed the 50% mark after trailing below this midpoint for the last two years-which is good news for the future of property stock levels in the market.
Sentiment to buy improved to 77% in Q4 2024 from 73% in the previous quarter and has been on an upward trajectory since the second quarter of 2023.
Selling sentiment grew to 51% from 48% in the third quarter of 2024, with some respondents who sold in the last 12 months saying they needed to free up funds.
The report highlighted that investing sentiment rose 5% to 85% quarter on quarter-the most substantial growth across the survey's key metrics.
"Investors feel now is the time to expand their portfolios as the economy shows signs of recovery," Absa said.
First-time buyers surge
Absa also pointed out that the number of first-time buyers surged at the end of 2024, with confidence boosted by interest rate expectations moving forward.
"First-time buyers continue to drive market activity, with more than half of the total applicants coming from this segment," it said.
"This subsegment still displays a high level of positive sentiment in the future of the property market compared to other segments," it added.
First-time buyers are expected to remain drivers of market activity, displaying high levels of positive sentiment. In 2024, they account for 53% of property registrations, according to Absa data.
"Recently, there has been some relief from an interest rate perspective for consumers, with one 25bps rate cut made in January and another forecasted in March.
"As cashflows and affordability improve, we foresee continued growth in first-time buyers entering the market," the bank added.
There is also positive movement in House Price Indices, including the Absa House Price Index, which will likely spur the property market's gradual recovery into 2025," Ncapai said.
"While we continue to monitor key developments in the geopolitical arena as well as within our own country's government of national unity, we remain optimistic about the prospects for South African consumers and businesses in the real estate environment," she added.
Ncapai noted that while South African consumers are only just beginning to recover financially from the nation's recent cost-of-living crisis, the aspiration of homeownership remains strong, and a large base of potential buyers is looking for opportunities to participate in the market.
Author: Malcolm Libera