SA property market sees decade-high consumer confidence

South African consumers are positive about the future of residential property, with confidence rising to 87% in Q4 2024, according to the Absa Homeowner Sentiment Index. 

The index, which is a barometer of consumer confidence across six key metrics in the South African housing market, sampled more than 1,200 participants who earn an income and hail from metropolitan areas, cities, and towns.

This is the highest level recorded in ten years, with first-time buyers continuing to dominate the housing market relative to other segments.

Nondumiso Ncapai, Managing Executive, Absa Home Loans, 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."

The sentiment to buy and invest in property reported strong results in Q4 2024, while confidence to sell exceeded the 50% mark after trailing below this midpoint for the last two years. This is good news for the future of property stock levels in the market.

Key metrics in Q4 2024

- The sentiment to buy increased to 77% in Q4 2024 from 73% in the previous quarter and has been on an upward track since the second quarter of 2023.

- The selling sentiment grew from 48% in Q3 2024 to 51% in Q4 2024. Some respondents who sold their property in the last 12 months said they needed to free up funds.

- The sentiment for investing improved by 5% to 85% quarter on quarter, which is the strongest growth across the survey’s key metrics, with investors feeling that now is the time to expand their portfolios as the SA economy is showing signs of recovery.

Seventy-seven percent of respondents expressed confidence in buying rather than renting, marking a 4% increase from Q3 2024. This shift is attributed to the belief that owning a home offers greater benefits than renting.

- Optimism regarding property renovations rose by 3% from Q3 to 82% in Q4 2024, driven by plans to enhance aesthetics, maintain properties, and protect their future value.

Looking ahead

First-time buyers are expected to remain drivers of market activity, showing high levels of positive sentiment.

According to the Absa data, first-time buyers in 2024 accounted for 53% of property registrations.

"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. There is also positive movement in House Price Indices, including the Absa House Price Index, which is likely to 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."

March 2025 interest rate decision

While there is confidence in the property market, the upcoming interest rate announcement could have a significant impact on the market. 

Samuel Seeff, chairman of Seeff Property Group, said that there was a marginal increase in inflation to 3.2%, and it remains near the bottom of the Sarb’s target range of 3% to 6%.

This means that South Africans have reason to expect that the South African Reserve Bank's Monetary Policy Committee will provide more relief at the next March meeting. 

Seef said that while the Reserve Bank has indicated that there may potentially be two more rate cuts of 25bps each, they are of the view that it is not enough, especially since inflation has dropped so low.

"This is the ideal time for the Bank to step in and provide a more meaningful cut of at least 50bps to provide a real boost to the economy and property market."

"Seeff believes that the biggest risk in the country right now is not inflation but economic stagnation and rising unemployment. A lower interest rate along with vital reforms are critical to address this."

IOL Property