{"id":782659,"date":"2024-07-16T11:20:39","date_gmt":"2024-07-16T09:20:39","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=782659"},"modified":"2024-07-16T11:22:40","modified_gmt":"2024-07-16T09:22:40","slug":"cash-strapped-homeowners-in-south-africa-forced-to-downgrade-2","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/property\/782659\/cash-strapped-homeowners-in-south-africa-forced-to-downgrade-2\/","title":{"rendered":"Cash-strapped homeowners in South Africa forced to downgrade"},"content":{"rendered":"\n

South African homeowners are being forced to downscale amid the high interest rate environment.<\/p>\n\n\n\n

The latest FNB House Price Index increased by 0.5% year-on-year in June – a slight improvement from 0.3% in May. <\/p>\n\n\n\n

“The low house price growth trajectory aligns with expectations given the persistent high living and borrowing costs,” said FNB.<\/p>\n\n\n\n

“Notably, lower-priced segments and non-metro regions continue to perform better. Market strength indicators suggest a potential stabilisation in supply and demand dynamics following a period of decline.” <\/p>\n\n\n\n

The latest Estate Agents Survey shows a housing market weighed down by election worries and several affordability constraints. <\/p>\n\n\n\n

Market activity ratings dropped to an average of 5.6 in 2Q24 – below the long-term average of 5.9. <\/p>\n\n\n\n

Nevertheless, the latest reading is above the most recent lows, suggesting that a potential bottom-out occurred.<\/p>\n\n\n\n

The slowdown aligns with agent expectations and highlights buyer hesitancy caused by the election uncertainty.<\/p>\n\n\n\n

The survey also looks into the motivations behind property sales, with downscaling a common theme.<\/strong><\/p>\n\n\n\n

Downscaling due to life stages, which include moving into retirement homes, remains the most common reason in South Africa, totalling 22% of total sales. <\/p>\n\n\n\n

Financial pressure-induced sales also rose slightly to 21% of total sales in Q2<\/strong>, aligning with the historical average and suggesting a common trend of sellers motivated by high debt-servicing costs.<\/strong> <\/p>\n\n\n\n

Notably, the survey also shows a preference among these financially motivated sellers to downsize rather than rent, reinforcing the continued buying-down trend. <\/p>\n\n\n\n

Relocation within South Africa (semigration) remained steady at 14% – still above the long-term average <\/p>\n\n\n\n

Upgrading activity, on the other hand, slowed significantly to 11%, highlighting homeowners’ cautious approach in the current high-interest rate market. <\/p>\n\n\n\n

Emigration-related sales also remained unchanged at 8%, shifting away from the peak seen in 2019. <\/p>\n\n\n\n

Amid the downsizing trend, the affordable housing segment is offering a glimmer of hope. <\/p>\n\n\n\n

The segment recorded a higher activity rating &.4) compared to the traditional market (5.0). <\/p>\n\n\n\n

“Following the recent support from ultra-low interest rates, buying activity in this segment appears to be further supported by a search for less expensive properties, as elevated interest rates and stricter lending standards stretch affordability for many,” said FNB. <\/p>\n\n\n

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“Overall, the Estate Agents Survey paints a picture of a housing market in cautious mode. Affordability concerns, election anxiety, and high interest rates dampened activity and agent sentiment in Q2,” said FNB.<\/p>\n\n\n\n

“However, the resilience of the affordable housing segment and pockets of regional strength offer some tentative signs of hope.” <\/p>\n\n\n\n

That said, FNB is maintaining a cautiously optimistic outlook for the rest of the year, with slower price increases and the possibly of interest rate cuts supporting the bottoming out of buying activity. <\/p>\n\n\n\n

“Additionally, if the new administration implements pro-growth policies, lower interest rates could further support potential buyers and lead to a revitalised housing market.”<\/p>\n\n\n\n

Economists remain divided on when the South African Reserve Bank (SARB) will start cutting interest rates. <\/p>\n\n\n\n

Nedbank and the Bureau for Economic Research (BER) are expecting cuts to start in September, while Investec only foresees cuts in November. <\/p>\n\n\n\n

Bank of America only expects the cutting cycle to start in January, followed by cuts in March, May and July. <\/p>\n\n\n\n

However, all agreed that cuts will not take place when the Monetary Policy Committee (MPC) meets later this week on Thursday, 18 July. <\/p>\n\n\n\n

Group<\/th>July Meeting<\/th>First Cut<\/th><\/tr><\/thead>
Nedbank<\/td>Hold<\/td>September 2024<\/td><\/tr>
BER<\/td>Hold<\/td>September 2024<\/td><\/tr>
Investec<\/td>Hold<\/td>November 2024<\/td><\/tr>
Bank of America<\/td>Hold<\/td>January 2025<\/td><\/tr><\/tbody><\/table><\/div><\/figure>\n\n\n\n
\n\n\n\n

Read<\/strong>: The woman running the biggest bank in South Africa \u2013 now worth over R400 billion<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

South Africa’s affordable property market is booming amidst the high interest rate environment. <\/p>\n","protected":false},"author":95,"featured_media":738703,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12755],"tags":[5349,76,26,1498,1799],"class_list":["post-782659","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-property","tag-bank-of-america","tag-fnb","tag-headline","tag-investec","tag-nedbank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/782659","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=782659"}],"version-history":[{"count":5,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/782659\/revisions"}],"predecessor-version":[{"id":782721,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/782659\/revisions\/782721"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/738703"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=782659"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=782659"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=782659"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}