Why south Africans are selling their homes based on price bracket

Recent insights from FNB reveal a more optimistic outlook for South Africa’s housing market.

According to the FNB Estate Agents Survey, market activity ratings improved to an average of 5.8 in the third quarter of 2024, up from 5.6 in the second quarter.

Although still slightly below the long-term average of 5.9, the continued recovery from recent lows indicates the market has likely stabilised, particularly since the latter half of 2023.

The survey highlights increased activity in middle-to-high-priced segments, driven by stronger market sentiment. However, the affordable housing sector experienced a slowdown due to high interest rates and tighter lending conditions, with activity dropping to 7.4 compared to the previous quarter.

In contrast, the middle-to-higher-priced segments showed improvement, with activity rising from 5.1 to 5.4. This segment has benefited more from positive sentiment, while the affordable market remains more sensitive to changes in interest rates.

The survey, conducted before the South African Reserve Bank’s interest rate cut in September, reflects stronger confidence in higher-priced markets, while affordability challenges persist in lower-priced segments.

Looking ahead, 58% of agents foresee robust market momentum in the fourth quarter, particularly in higher-priced segments.

Agents also expect the ongoing interest rate cuts, including one anticipated in November, to have a delayed but positive impact on the affordable market.

Key drivers for property sales remain life-stage changes, such as retirees moving to smaller homes (22% of sales), and financial pressures, which accounted for 23% of sales.

Sales due to financial strain are above the long-term average of 18%, with many sellers opting to downsize rather than rent, reinforcing the trend of buying down.

Upgrading activity remains cautious, with only 10% of sales linked to upsizing, as buyers are wary of incurring additional debt amid high interest rates.

Emigration-related sales dropped to 7%, down from 8% in the previous quarter and far below the 14.2% peak recorded in early 2019. While fewer South Africans are emigrating, semigration continues to rise, with 14% of sales linked to relocation, well above the historical average of 9%.

These trends reflect a housing market that is gradually recovering while adapting to changing buyer behaviour and economic conditions.