{"id":790406,"date":"2024-09-10T12:00:00","date_gmt":"2024-09-10T10:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=790406"},"modified":"2024-09-10T11:44:03","modified_gmt":"2024-09-10T09:44:03","slug":"glimmer-of-hope-for-property-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/790406\/glimmer-of-hope-for-property-in-south-africa\/","title":{"rendered":"Glimmer of hope for property in South Africa"},"content":{"rendered":"\n<p>FNB expects that the housing market will benefit from the drop in inflation and, in turn, interest rates. <\/p>\n\n\n\n<p>Stats SA latest data showed that headline inflation declined from 5.1% in June to 4.6% in July &#8211; the lowest level in three years. <\/p>\n\n\n\n<p>FNB has thus revised its inflation outlook downward due to a strengthening in the rand exchange rate, while domestic political uncertainty has eased and global sentiment has improved. <\/p>\n\n\n\n<p>The group now has an earlier start to the interest rate-cutting cycle, with two 25-basis-point cuts in the repo rate this year and another 25-basis-point cut in 2025. This would decrease the repo rate from 8.25% to 7.50% in 2025.<\/p>\n\n\n\n<p>Standard Bank, Investec, Nedbank, Bank of America, and the Bureau for Economic Research (BER) expect the cutting cycle to begin next week. <\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-wp-embed is-provider-businesstech wp-block-embed-businesstech\"><div class=\"wp-block-embed__wrapper\">\n<blockquote class=\"wp-embedded-content\" data-secret=\"xr3M2xh7vQ\"><a href=\"https:\/\/businesstech.co.za\/news\/banking\/789404\/the-6-people-in-charge-of-interest-rates-in-south-africa\/\">The 6 people in charge of interest rates in South Africa<\/a><\/blockquote><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;The 6 people in charge of interest rates in South Africa&#8221; &#8212; BusinessTech\" src=\"https:\/\/businesstech.co.za\/news\/banking\/789404\/the-6-people-in-charge-of-interest-rates-in-south-africa\/embed\/#?secret=fbNxwEzufS#?secret=xr3M2xh7vQ\" data-secret=\"xr3M2xh7vQ\" width=\"500\" height=\"282\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe>\n<\/div><\/figure>\n\n\n\n<p>FNB has also increased its GDP growth forecast to 1.0% in 2024 and 1.8% in 2025. <\/p>\n\n\n\n<p>This is due to easing energy constraints, lower inflation, interest rate cuts, improved market sentiment, and changes in expectations over the two-pot retirement system. <\/p>\n\n\n\n<p>&#8220;These adjustments suggest a slightly more optimistic outlook for buying activity and house price growth in the coming years,&#8221; said Siphamandla Mkhwanazi, FNB Senior Economist. <\/p>\n\n\n\n<p>&#8220;Improved economic activity, a more benign inflation environment, and looser monetary policy could improve affordability for potential homebuyers, stimulate demand and support house price growth.&#8221;<\/p>\n\n\n\n<p class=\"has-medium-font-size\"><strong>Needs a shot in the arm <\/strong><\/p>\n\n\n\n<p>The FNB House Price Index (HPI)&nbsp;growth averaged 0.6% year over year in August, the same level as in July.<\/p>\n\n\n\n<p>&#8220;Notably, the slowing trend appears to have stabilised since May and is expected to show a clearer upward trend once interest rates begin to decline,&#8221; said Mkhwanazi. &nbsp;<\/p>\n\n\n\n<p>The mortgage market extension also slowed from 2.7% in June to 2.5% in July, highlighting subdued demand, house prices, and stringent lending criteria. <\/p>\n\n\n\n<p>Deeds data shows that while loan-to-price ratios have stabilised, mortgage volumes are still declining, even at a slower pace, due to reduced demand. Weakening affordability results in lower approval rates. <\/p>\n\n\n\n<p>The rental market, on the other hand, exhibits mixed trends. Rental inflation fell slightly from 3.3% in Q1 to 3.2% in Q2. <\/p>\n\n\n\n<p>That said, Rode&#8217;s residential survey data indicates that flat vacancy rates have decreased, even though they remain higher than the pre-COVID level, indicating a relative surplus of rental properties. <\/p>\n\n\n\n<p>&#8220;While high interest rates may favour renting over buying, this data suggests that this has not been sufficient to absorb the excess supply, potentially due to a sluggish labour market,&#8221; said Mkhwanazi. <\/p>\n\n\n\n<p>&#8220;In addition, our 2Q24 Estate Agent Survey results suggest that most households that are selling due to financial pressure would rather downscale than go back into the rental market.&#8221;<\/p>\n\n\n\n<p>&#8220;On the supply side, the&nbsp;volume of new-build housing stock&nbsp;is declining, mirroring the subdued demand. This downturn is particularly pronounced in the &lt;80 square metre category, primarily representing affordable housing.<\/p>\n\n\n\n<p>The housing market struggles with high interest rates and a weak job market. <\/p>\n\n\n\n<p>However, the forecast of an improved inflationary environment and impending rate-cutting cycles offers hope of a gradual recovery. <\/p>\n\n\n\n<p>That said, the timing of the recovery&#8217;s extended period will depend on several factors, such as the trajectory of inflation, economic growth, and global conditions.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>Read<\/strong>: <a href=\"https:\/\/businesstech.co.za\/news\/property\/790247\/good-news-for-small-shopping-malls-in-south-africa\/\">Good news for small shopping malls in South Africa<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>FNB expects that the easing of inflation and interest rates will give the South African property market a much needed shot in the arm. <\/p>\n","protected":false},"author":95,"featured_media":782345,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[961],"tags":[76,26],"class_list":["post-790406","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking","tag-fnb","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/790406","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=790406"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/790406\/revisions"}],"predecessor-version":[{"id":790435,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/790406\/revisions\/790435"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/782345"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=790406"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=790406"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=790406"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}