Dear Business Partner,
Please find attached the latest FNB residential property report.
Summary:
Market overview and current trends
The latest FNB House Price Index (HPI) highlights a gradual but steady recovery in the housing market. House price growth averaged 0.9% y/y in December, slightly below November’s revised 1.0%, bringing the annual average to 0.8%—in line with forecasts but lower than the 1.5% achieved in 2023. Our proprietary market strength indicators suggest improving demand and shrinking supply, creating a favorable environment for property values. However, real house prices remain undervalued relative to market strength indices, reflecting buyer caution despite improving conditions, likely shaped by the lasting aftermath of the cost-of-living crisis.
Looking ahead, we anticipate house price growth to accelerate to 1.7% in 2025 and exceed 3% by 2026, supported by easing inflation, lower borrowing costs, and improving consumer sentiment.
Estate Agents Survey Insights
The 4Q24 FNB Estate Agents Survey further underscores market normalisation. Activity ratings rose to 6.0 (out of 10)—the highest since 4Q22—driven by gains in the middle-to-high-price segments and broad-based regional improvements, with KwaZulu-Natal and Gauteng leading the recovery, both rebounding from relatively low bases. However, sentiment was mixed, with overall agent satisfaction easing slightly to 61% from 62%, reflecting affordability constraints in lower-price segments. Selling times have shortened slightly, averaging 11 weeks, with the R2.6–R3.6m segment seeing the biggest improvement. Financial pressure remains a key driver of sales (26%), though most affected sellers continue to downsize rather than rent. Emigration-related sales declined to 5%, while upgrading activity rose to 12%, signaling early signs of a recovery in higher-end markets.
Conclusion and outlook
The housing market shows encouraging signs of recovery, with improving sentiment, shorter selling times, and increasing activity in middle-to-high-price segments. However, affordability challenges and the lingering effects of the cost-of-living crisis continue to weigh on certain areas of the market, particularly the affordable segment. Financial pressures remain a dominant theme, but easing inflation and borrowing costs should gradually provide relief. As market fundamentals improve, the groundwork is being laid for a more sustained recovery. While challenges persist, the ongoing positive momentum suggests that the housing market is poised for a stronger performance in the coming years.
Regards,
FNB Economist
Siphamandla Mkhwanazi
