The latest FNB residential property barometer indicates a continuing cooling-off in the South African residential property market.
It indicates that the interest-rate hikes in June and August had an immediate effect on activity and sentiment within the property market.
The Residential Property Confidence Indicator (RPCI), which measures overall confidence levels, illustrated an activity level of 6,3 (out of 10) prior to June. However, the activity sentiment decreased to its lowest score of 5,5 after the interest-rate announcement in August.
The effect of the interest-rate hikes can also be seen in the categorisation of activity. While the “very active” and “active” sentiment totalled 55% in the second quarter of the year, the same sentiment only totalled 31% after the August interest-rate increase.
Nevertheless, both property professionals and developers operating in the development market believe that there is still growth potential in the market, but that this will be geared towards the middle-to-lower end of the market (R300Â 000 to R700Â 000), which is the most active.
FNB said the black middle class is continuing to enter the market, with a strong emphasis on females taking the role of the decision-maker when purchasing the home.
The survey found that, in general, 74% of properties are sold at less than the asking price, properties are sold on average within nine weeks and the buy-to-let market shows signs of strengthening. — I-Net Bridge