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'As cashflows and affordability improve, we foresee continued growth in first-time buyers entering the market.'
For illustrative purpose. Picture: iStock
South Africans are feeling upbeat, with their confidence in the future of residential property climbing to 87% in the final quarter of 2024.
Absa says this is the highest level the bank’s Homeowners Sentiment Index (HSI) has recorded in a decade. The market’s dominance of first-time buyers relative to other segments is an ongoing trend.
HSI was established in 2015 and indicates the overall state of consumer confidence in South Africa’s property market.
Absa says it measures consumers’ sentiment concerning the current timing for buying, selling, investing, buying rather than renting, and renovating property.
The index asks six key questions to a representative sample of South African consumers living in metropolitan areas, cities, and large towns earning an income.
For this survey, it sampled more than 1 200 participants.
The bank’s data has shown an increasing shift towards single women applying to purchase homes, which remained prevalent among first-time home buyer applicants.
This subgroup of homeowners is becoming a key driver of the property market activity. The remaining applications are made up of solo men, joint customers, and legal entities.
HSI survey revealed that first-time buyers continue to drive market activity, with more than half of the total applicants coming from this segment.
“This subsegment still displays a high level of positive sentiment in the future of the property market compared to other segments.
“As cashflows and affordability improve, we foresee continued growth in first-time buyers entering the market.”
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The survey notes that, according to the Deeds Office data, homeowners who sell their current property and buy in another province continue to choose the Western Cape.
This subgroup of Repeat Buyers who are moving to the Western Cape are predominantly from Gauteng.
“Investors feel now is the time to expand their property investment portfolios in an environment where the economy shows signs of recovery.
“The current HSI investor confidence is the highest level this sentiment survey has seen since 2016. From our survey, 47% (46% Q3) investors indicated that there is currently good demand for rental properties.”
The survey notes that, in the fourth quarter of 2024, overall consumer confidence in the property market improved to its highest level since the study’s start.
Selling property started to show some signs of improvement recently.
85% of the participants said it is the appropriate time to invest, 51% said it is time to sell their properties, and 77% said it is the appropriate time to buy.
The renovate sentiment increased to 82% compared to quarter three of 2024, trending upward since the start of 2023.
“Most respondents said they renovate to add value to their properties and make living spaces more enjoyable.
“For others, renovations are driven by the need to repair and maintain properties. The high cost of materials remains a key detractor.”
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Nondumiso Ncapai, managing executive at Absa Home Loans, said the results indicate the resilience of optimistic South African consumers even as they emerge from the burden of a protracted cost-of-living crisis.
She added that first-time buyers are expected to remain drivers of market activity, displaying high levels of positive sentiment.
“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 will likely spur the property market’s gradual recovery into 2025.
“While South African consumers are only just beginning to recover financially from the nation’s recent cost-of-living crisis, the aspiration of homeownership remains strong, and a large base of potential buyers is looking for opportunities to participate in the market.”
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