The latest FNB House Price Index (HPI) averaged 0.8% in November 2024, slightly lower than 0.9% in October (revised from 0.3% y/y). FNB Senior Economist Siphamandla Mkhwanazi comments.
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We note the revisions to the most recent prints. These are mostly ascribed to updates to the Deeds data, especially in the Gauteng regions, which we use to match with our internal valuations data. Revised data now suggests that house prices troughed around June, which aligns with our initial expectations. This earlier trough aligns with improving sentiment and the initial signs of market recovery.
The recent uptrend depicted by the revised data is consistent with other market indicators, such as the FNB 3Q24 Estate Agents Survey, which indicated a surge in activity, particularly in key regions such as Gauteng and Western Cape, coupled with a reduction in the time it takes to sell property.
Furthermore, expectations of near-term activity were robust due to improved sentiment and expectations of further rate cuts. Lower borrowing costs are expected to stimulate demand in lower-priced segments, where affordability remains a constraint.
Historical comparison
Still, a historical comparison of real house prices to our market strength indices suggests that current real house prices should be higher. This divergence may indicate that while buyer interest has increased, market forces have not been sufficient to generate significant upward momentum in property values.
As we emerge from the cost-of-living crisis, current trends suggest that buyers remain cautious, prioritising affordability. Indeed, mortgage extensions remain subdued, averaging 2.8% year-to-date, down from 5.7% in 2023.
Nevertheless, we maintain a cautiously optimistic outlook, supported by easing inflation, declining borrowing costs, improving real incomes, and strengthening consumer sentiment. House price growth should average around 0.8% this year, before climbing towards 1.7% in 2025 and the 3% mark in 2026, respectively.
See the FNB Residential Property Barometer graphs here.
Read about the FNB Residential Property Barometer for October and November 2024 here.
