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The housing market is showing growth, with house prices slowly increasing.
According to the latest FNB House Price Index (HPI), house prices grew by 0.9% in December compared to the previous year.
Siphamandla Mkhwanazi, FNB Senior Economist, says this was slightly lower than November’s 1.0% but brought the yearly average to 0.8%.
While this is lower than the 1.5% growth seen in 2023, he believes the market is on a steady path to recovery.
He has attributed rising house prices to improving demand and a shrinking supply of available homes.
“More people are looking to buy houses, but there are fewer houses for sale.”
This situation helps push prices up. However, despite the improving market, real house prices remain undervalued.
Many buyers are still cautious, possibly due to the lasting effects of the cost-of-living crisis.
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Mkhwanazi adds that they expect house prices to grow even more.
“In 2025, prices are predicted to rise by 1.7%, and by 2026, growth could exceed 3%. Several factors will support this increase such as lower inflation, reduced borrowing costs, and improved consumer confidence.
“As these factors improve, more people will be able to afford houses, leading to increased demand and higher prices.”
He says the FNB Estate Agents Survey for the fourth quarter of 2024 highlights signs of market recovery.
“The survey, market activity has increased, reaching its highest level since late 2022. The middle-to-high price segments experienced the most growth, with regional improvements particularly strong in Kwazulu-Natal and Gauteng.”
Additionally, the average selling time for houses decreased slightly to 11 weeks, suggesting a quicker turnaround in property transactions.
A notable trend in the survey is the significant improvement in the R2.6 million to R3.6 million price range, indicating increased demand in this segment.
“These findings suggest that buyer confidence strengthens, leading to faster sales and a more active property market.
“As conditions continue to improve, this upward momentum could further support overall market stability and growth.”
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Despite the positive trends, some challenges still exist. Many people are struggling with affordability, especially in the lower-price segments.
“Financial pressure remains a major reason for selling homes, with 26% of sellers facing financial difficulties.
“However, most of them are downsizing rather than choosing to rent, which shows continued interest in homeownership.
“On the bright side, emigration-related sales have dropped to 5%, while more people (12%) are upgrading their homes,Signaling a recovery in higher-end markets.”
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