FNB's Residential Property Barometer for October
Category Market News
The slowing trend in house price growth continued in September, with the FNB House Price Index decelerating to 3.0% y/y for August, from 3.6% in August (revised up from 2.6%1). This means house price growth averaged 3.5% in 3Q21, down from a peak of 4.8% in 2Q21.
Key themes
- Market strength indicators continue to show moderating demand, following a strong rebound in 2H20 and into 2021. However, these are still above 2019 levels, reflecting the positive effect of lower interest rates on market activity and the changing housing needs due to the pandemic (greater adoption of working from home and homeschooling).
- Despite slowing volumes growth, the value of mortgage extension continues to grow at a faster pace supported by demand for bigger loans, reflecting a shift towards higher price brackets (or bigger properties).
- Weaker-than-expected 2Q21 labour market data, combined with the potential adverse effects of the recent unrest on employment prospects for 3Q21, suggests that longer-term demand fundamentals will take longer to recover to pre-pandemic levels. However, we note a potential upside on non-wage income, especially dividend income, which has boosted income growth for affluent households.
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article courtesy FNB Property Barometer
Author: FNB Property Barometer - Siphamandla Mkhwanazi
