Property market confidence soars as SA Home sentiment hits record levels

South Africans are feeling bullish about their homes, with the overall homeowner sentiment index climbing to 87%, up 3% quarter on quarter, in the fourth quarter (Q4) of 2024 - the highest in a decade.

The Absa Homeowner Sentiment Index (HSI) is compiled from a survey of over 1 200 income-earners from metros, cities, and towns, shows growth. Sentiment to buy rose to 77% from 73% in Q3 and has been on an upward trajectory since the second quarter of 2023, while investing sentiment rose 5% to 85% quarter on quarter - the strongest growth across the survey’s key metrics.

"Investors feel now is the time to expand their portfolios as the economy is showing signs of recovery," the report noted.

“This result bodes well for the outlook of the property market into 2025 and is indicative of the resilience of South African consumers who are optimistic even as they emerge from the burden of a protracted cost-of-living crisis,” said Nondumiso Ncapai, the managing executive at Absa Home Loans.

Selling sentiment grew to 51% from 48% in the third quarter of 2024, with some respondents who sold in the last 12 months saying they needed to free up funds. Meanwhile, 77% of respondents said they were confident to buy rather than rent, up 4% from the previous quarter, driven by the belief that it is more beneficial to own a home than rent one. Optimism around renovating property grew 3% from Q3 to 82% in the final quarter of last year, with some planning to renovate for aesthetic reasons, others for maintenance and to safeguard the future value of their properties.

The report said, "The increasing shift towards single women applying to purchase homes remained prevalent among first-time home buyer applicants. This subgroup of homeowners is becoming key drivers of the property market activity." Alongside solo men, joint customers, and legal entities, these women are driving activity, with first-time buyers making up 52% of property registrations last year, the same as in 2023.

The Western Cape is pulling punters too, with “semigration” from Gauteng driving a 22.5% year-on-year rise in net inward migration, according to Deeds Office stats. First-time buyers accounted for 53% of property registrations in 2024.

The HSI said, "Looking back, South African consumers endured a tough period with interest rates rising from the end of 2021 and stabilising in the second half of 2023 and first half of 2024. Apart from high interest rates and a general cost-of-living crisis, in 2024, consumers also experienced periods of intense loadshedding, logistic constraints at local ports, the threat of geopolitical tensions rising, and pre-election uncertainty in South Africa."

Consumer resilience, however, endured these potential threats, and an underlying tone of cautious optimism has persisted in our survey responses over the past 12 to 18 months. With consumer inflation gradually declining to below the South African Reserve Bank (SARB) target midpoint of 4.5%, electricity supply stabilising as of the second quarter of 2024, and the positive election outcome in South Africa creating certainty, things were looking up for consumers at the close of 2024. This positivity was further bolstered as homeowners ended the year with two 25 basis points (bps) rate cuts - one in September 2024 and another in November 2024.

Looking ahead, the HSI noted risks remain emerging in the first quarter of 2025, which may impact consumer sentiment in the property market throughout the year and must be closely monitored. These include: the signing of the Land Expropriation Bill into law, SA-US diplomatic and economic relationships, the SARB’s conference to discuss the inflation target in March, political party relations within the Government of National Unity, progress with Phase 2 of the government’s Operation Vulindlela, in particular infrastructure investment and funding, and National Budget outcomes.

“Recently there has been some relief from an interest rate perspective for consumers, with one 25bps rate cut made in January and another forecast in March. There is also positive movement in House Price Indices, including the Absa House Price Index, which is likely to spur the property market’s gradual recovery into 2025,” Ncapai said.

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