For those interested in a current property market overview and trends, have a look at the latest FNB Residential Property Barometer for January 2025.
WORDS & PHOTOS: SUPPLIED
Spokesperson Siphamandla Mkhwanazi, FNB Senior Economist, sums it all up – access the full barometer content here.
In summary
The latest FNB House Price Index (HPI) accelerated to 1.2% y/y in January 2025, from 1.1% in December 2024 (revised from 0.9%). While still subdued, this marks the highest growth rate since June 2023, reflecting a gradual market recovery.
Shifting consumer behaviour, mortgage lending trends
- The average loan-to-value (LTV) ratio has increased to 95.1% in 4Q24, indicating a modest improvement in lending conditions and cautious optimism among lenders. This reflects a gradual loosening of lending standards in response to an improving economic backdrop.
- The 4Q24 FNB Estate Agents Survey highlighted notable shifts in first-time buyer behaviour:
- There’s a noticeable reduction in reliance on unsecured credit for deposits, with more first-time buyers utilising personal savings. This is attributed to improving household finances and the early impact of the “two-pot” retirement system.
- First-time buyer participation has risen to 25% of total market activity, with a significant 39% share in the Affordable segment. However, participation remains below 2022 levels, suggesting ongoing affordability constraints.
Growing interest in Buy-to-Let investments
- Buy-to-let purchases have increased to 12% of market activity, with the Affordable segment driving much of this growth (30% of purchases). This indicates strong investor confidence and a search for alternative investment opportunities in a stabilising property market, with expected strong rental yields.
Outlook
- The rising presence of both first-time buyers and buy-to-let investors in lower-priced segments underscores strong affordability-driven demand and improving confidence in property as an investment.
- If wage growth continues to outpace inflation (as indicated by the BankservAfrica Take-home Pay Index) and interest rates decline further, housing demand for both ownership and rental should strengthen.
- The FNB HPI is projected to climb towards 1.7% in 2025, and accelerate to exceed 3% by 2026, as market fundamentals continue to improve.
