Home buying expected to take turn for worse
restrict growth in the long term. Inevitably, all types of investments, including all types of property, will be negatively affected by such an outcome.”
Much of this is echoed by FNB’s household and property sector strategist, John Loos, who emphasises that although the bank is seeing an increase in home loan volumes, there is also “quite a time lag” from when people first start viewing potential homes to when they submit their home loan applications.
Up until the first quarter of 2017 at least, he says signs of economic improvement, along with mild residential market improvement, were showing.
More recently, however, the much- publicised ratings agency downgrades may have dampened sentiment in April/May to date.
If this is the case, Loos says the bank may soon feel it in its own home loan application numbers.
But only time will tell because, so far, there are no widespread signs of panic selling or huge increases in financial stress. Sentiment though, is “not overly positive”, and there has been a mild increase in the percentage of sellers selling in order to emigrate, from a low of 2% at the end of 2013 to 6.2% by the first quarter of 2017.
“In short, we see a market where sentiment certainly isn’t wonderful outside of the Western Cape – although it is slowing there too now, and low house price growth and the market as a whole has not had much transaction growth for some time.
“To date we have experienced a weak but relatively calm market, but it is definitely possible that the widespread publicity given to South Africa’s newly acquired ‘junk status’ may have dampened sentiment from April onward.”