Consumers see property positively
Figure is down from third quarter of last year
ABOUT 75 percent of consumers have positive sentiments about residential property despite the tough economic environment and the pressure it was exerting on them.
This was one of the conclusions of the first Absa homeowner sentiment index released yesterday.
Absa home loans head of business Peter Swartz said the index sought to better understand consumer perceptions about home buying, selling, investing, renting and renovating of residential property.
Swartz said the data showed that 72 percent of consumers in the first quarter of last year had a positive sentiment about the residential property market, which peaked at about 83 percent in the third quarter of last year before deteriorating in the last quarter of last year and into this year.
He stressed the consumers surveyed were the decision-makers in household matters.
Swartz attributed the deterioration in sentiment to 74 percent in the second quarter of this year to economic data, including the run-up to the downgrade in South Africa’s credit ratings by S&P and Fitch in April, that resulted in increased financial pressure on consumers.
The index showed that buying sentiment improved last year before dropping 10 percentage points to 60 percent in the first quarter of this year.
However, it improved to 64 percent in the second quarter.
Swartz said major reasons consumers cited for why it was a good time to buy residential property included that property still accumulated value, good property investments were available and property prices were relatively low and there were bargains in the market.
The biggest concern mentioned about buying property in the second quarter survey was that the economy was not doing well and was in recession.
Swartz said the sentiment about residential property selling was much lower than for buying, with less than half of consumers indicating it was an appropriate time to sell.
There is a reluctance among consumers to sell properties, with the top reason being that property prices are low.
He said there was a reluctance among consumers to sell properties, with the top reasons mentioned that property prices were low and they would not receive their asking price.
Swartz said consumer sentiment around residential property investment was one of the most positive of sub indices, with 85 percent of consumers in the third quarter of last year positive about investing.
Consumer sentiment about investing in residential property tracked the overall sentiment and had declined to 78 percent in the second quarter of this year.
Swartz said the most cited reasons consumers provided for their belief that property remained a good investment were that property in general provided a good return, bargains were still available in the market and there was demand for rental accommodation.
He said the majority of consumers believed it was better to buy than to rent because it was better to pay off their own bond than rent and pay off someone else’s bond.
Reasons provided by consumers for renting related to affordability and that it was cheaper to rent than to buy and property prices were high.
A total of 75 percent of respondents displayed positive sentiments in the second quarter of this year when asked if it was a good time to renovate or do alterations to a property.
Swartz said the most important reasons provided for this sentiment were that renovations increased the value of a property and it was good to constantly upgrade a property.
He expected the overall index, which would be released quarterly, to remain under pressure for the remainder of the year because of the uncertain economic environment.