Homeowners Sentiment Index indicates cautious optimism

The Homeowners Sentiment Index for the first quarter of 2024 indicates cautious optimism in the property market.

Sentiment towards buying property is now rebounding after trending downwards since late 2021, when the increases in the repo rate started.

Women and first-time buyers are now also considering buying rather than renting a home according to Absa’s Homeowners Sentiment Index for the first quarter of 2024 in a survey conducted among 1 149 respondents.

ALSO READ: Property sector expected to rebound post-elections

The number of positive responses rose by 4% compared to the final quarter of 2023 and 9% compared to sentiment recorded a year ago. This quarter’s index also indicates healthy growth in sentiment across investors surveyed, surging by 6% compared to the previous quarter. This increase is the highest score recorded in the index’s investor subcategory in three years.

“These figures indicate that consumers and investors are increasingly optimistic about the property market’s prospects, anticipating better days ahead. While risks remain, sentiment around the property market’s future returns is promising, reflecting what we have known to be true in South Africa for many years that property remains an aspirational and desirable investment,” Nondumiso Ncapai, managing executive at Absa Home Loans.

Overall sentiment improved

Key findings of the Index were:

• Overall sentiment improved to 82%, up from 78% in the fourth quarter of 2023, while there was growth in all the subcategories surveyed in the index.
• Sentiment to buy property grew by 8% to 72% compared to the previous quarter and 11% compared to the first quarter of 2023 – an inflection point in what has been a downward trend since the final quarter of 2021.
• Investor sentiment increased by 6% compared to the fourth quarter of 2023, reaching the highest level since the first quarter of 2021.
• There was a notable increase in positive sentiment among first-time homebuyers, with many feeling that now is an opportune time to invest in property.
• There was also a significant uptick among women who now consider it more appropriate to buy rather than rent.

Security of property as an asset

Ncapai says the security of property as an asset, consistent appreciation in property values over time and the creation of long-term income were among the main factors cited by respondents concerning the attractiveness of property as an investment class while a challenging economy, political instability, crime, high unemployment rates and escalating property prices were identified by respondents as significant barriers to market enthusiasm.

“The Homeowners Sentiment Index serves as a barometer for the health of the property market and reflects the evolving attitudes of consumers towards home ownership and investment in real estate. The data underscores a growing confidence that is likely to stimulate further activity in the market.”

ALSO READ: Won’t buy or sell until the elections?- Polls impacting the property market

She says while interest rates are now expected to remain higher for longer than expected at the start of 2024, extending the time anticipated for a full recovery of the property market, positive signals in the period under review suggest consumers are already gearing up for better times.