| FNB | Residential Property Barometer – August 2023 |
| Dear Business Partner Please find attached the latest FNB Residential Property Barometer. In summary: The FNB House Price Index growth slowed to 1.1% y/y in July, down from 1.6% in June (revised from 1.7%). This is in line with the continued decline in buying activity, with mortgage volumes now tracking closer to pre-pandemic levels. The average bond amount, estimated from deeds data, declined by approximately 3% in 2Q23, the first decline in 14 years (since 2Q09). Similarly, year-to-date tax data reveals that property transfer duties are down by 10.3% compared to the same period last year. In addition to lower demand, these indicators signify a downscaling trend by buyers, along with tightening of lending standards amid higher borrowing costs and affordability constraints. Feedback from estate agents indicates a widening gap between income levels and current house prices. Approximately 45% of surveyed estate agents assert that income levels have considerably lagged behind house prices, while 24% believe income has managed to keep pace. Consequently, a larger proportion of sellers have needed to recalibrate their expectations and reduce their asking prices. Although the average discount quantum on asking prices remains consistent, hovering around 10%, our survey suggests that 81% of sellers in 2Q23 were compelled to lower their asking prices, reflecting an increase from 75% in the previous quarter. Collectively, these indications suggest a subdued environment for house price growth. However, variations are evident across regions, with data showing relatively stronger performance in the Eastern and Western Cape regions. Full report attached. Regards, Economist FNB Economics, Wealth and Investments |