FNB data indicates a gradual yet steady recovery in the housing market, though financial pressures persist across most price segments for consumers.
In December, house prices grew by 0.9% year-on-year, slightly down from the revised 1.0% in November.
This brings the annual average growth to 0.8%, in line with expectations, though below the 1.5% growth seen in 2023.
FNB’s proprietary market strength indicators suggest that improving demand, combined with shrinking supply, is creating a favourable environment for property values.
However, despite these positive trends, real house prices remain below their potential, reflecting continued buyer caution—likely a result of the enduring effects of the cost-of-living crisis.
Looking ahead, FNB forecasts house price growth to accelerate to 1.7% in 2025, with the potential to surpass 3% by 2026.
This optimism is supported by easing inflation, lower borrowing costs, and a rebound in consumer sentiment.
The South African Reserve Bank reduced the repo rate by another 25 basis points last week, bringing the prime lending rate down to 11%. This marks the third rate cut since September 2024.
The recent cuts, particularly those introduced at the close of 2024, appear to be having a positive effect on the residential property market.
Standard Bank reported a notable increase in home loan applications between Q3 and Q4 of 2024, signalling a rebound in buyer sentiment and a recovery in property market activity.
The FNB Estate Agents Survey for the fourth quarter of 2024 further underscores market normalisation.
Activity ratings rose to 6.0 (out of 10)—the highest since Q4 2022—driven by increased activity in the middle-to-high-price segments and broad-based regional recoveries, particularly in KwaZulu-Natal and Gauteng.
However, overall sentiment was mixed, with agent satisfaction slipping slightly to 61% from 62%. This indicates ongoing affordability pressures in lower-price segments.
The average selling time for properties has decreased slightly, now at 11 weeks, with the R2.6–R3.6 million price range seeing the most notable improvement. Financial pressure remains a key factor influencing sales, with 26% of transactions driven by financial stress.
However, most sellers facing financial strain are opting to downsize rather than rent out their properties. Emigration-related sales have declined to 5%, while upgrading activity has risen to 12%, signalling early signs of recovery in the higher-end property market.
The housing market shows positive signs of recovery, including improved sentiment, shorter selling times, and a notable uptick in activity within the middle-to-high-price segments.
However, affordability issues and the lingering effects of the cost-of-living crisis continue to impact the more affordable segments of the market, FNB said.
Financial pressure remains a dominant factor, but easing inflation and borrowing costs are expected to provide gradual relief, the financial services firm said.
As market conditions improve, the foundation is being set for a more sustained recovery. Despite ongoing challenges, the positive momentum suggests that the housing market is on track for a stronger performance in the years ahead.
