While home buying activity is expected to soften in the coming months, the housing market is set to benefit from banks jostling for good customers, says FNB.<\/p>\n
“Buying activity should soften in the coming months from the pandemic-induced elevated levels as affordability continues to deteriorate due to steeper interest rate increases and higher living costs. Nevertheless, we expect relative resilience,” the bank said in its July property barometer.<\/p>\n
“First, the post-lockdown wealth accumulation, buoyed by ultra-low interest rates and changes in housing preferences, helped strengthen household balance sheets. In addition, debt-to-income and debt-servicing costs ratios remain low by historical standards.<\/p>\n
“We expect these to remain relatively well-behaved, even with the steeper interest rate hikes. Further, the intensifying competition among lenders for good quality customers, and innovation to boost affordability should support activity, leaning against the effects of rising borrowing costs.<\/p>\n
FNB forcasts average house price growth of around 3.5% this year, lower than the 4.2% average last year. The bank forecasts house price growth to average 3.4% in 2023.<\/p>\n
Affordable market to benefit the most\u00a0<\/strong><\/p>\n FNB noted that South Africa’s affordable house price market is set to benefit the most from an increased focus from lenders.<\/p>\n “We expect price growth to moderate this year, relative to the strong growth in the prior few years, as labour market weaknesses and higher interest rates erode affordability.<\/p>\n “Importantly, however, greater focus on this segment by some lenders – which has yielded innovations to improve affordability such as the greater uptake of longer duration mortgages, such as a 360 months payment term and collective buying schemes – should provide impetus.<\/p>\n “Given the inherent property supply deficit and the general preference for ownership, we expect limited downward pressure on price growth in the segment,” it said.<\/p>\n Middle-priced and affluent markets<\/strong><\/p>\n Buying activity and house price growth in the middle-priced marker should continue moderating from unusually strong levels post-pandemic, as interest rate increases weigh, and rent-to-ownership migration dries up, FNB said.<\/p>\n “Our estate agents survey also sees a moderation in activity in the coming months, particularly in the R1.6 million-R2.6 million price bracket, which was among the post-pandemic outperformed.”<\/p>\n The group added that buying activity in the affluent market has been supported by good pricing, strong recovery in non-labour income, post-pandemic improvement in balance sheets and the work-from-home trend.<\/p>\n
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