Property market currently oversupplied, says FNB report

The FNB Property Barometer has shown that Pretoria was popular with first time home buyers, accounting for nearly 29% of all sales recorded in the first quarter of 2019, while Johannesburg also showed an increase.

Data collected by the bank showed that sales in the capital city peaked at 31.7% at the end of 2017, while Johannesburg followed at 21.3% in the second quarter of 2018.

“Since then, the proportion of first-time buyers in Johannesburg has risen to 25.5% in [the first quarter of 2019], while that of Pretoria dropped to 29%. The gap between the two cities will likely narrow further in the coming months,” said the report.

Although purchasing activity remains muted, the proportion of first-time buyers showed an upward trend in recent months, reaching an estimated 22.7% in the first quarter of 2019, from 17.6% in the first quarter of 2018.

The latest data indicated that the housing market has been hit by the impact of the country’s poor economic climate and declining wages, with the national House Price Index marginally declining 3.4 % year-on-year in April, down from a revised 3.5% in the previous month.

The figure was previously forecast at 3.8%. The report also revealed that the property market was oversupplied

According to the report based on agents’ survey results, although purchasing activity remained muted, the proportion of first-time buyers has trended up in recent months, reaching an estimated 22.7% in the first quarter of 2019, from 17.6% in the first quarter of 2018.

“While we expect a transitory boost in sentiment post elections, it may take a while before it permeates into an acceleration in house prices, particularly since the market is currently oversupplied”,  suggesting that sellers were holding back stock amid low demand levels.

It noted that “the resurgence in the Western Cape had lost momentum” –  with prices steadying around 4.6% y/y in the first quarter of 2019 from 4.8% in the fourth quarter of 2018.

“Nevertheless, the region still outperforms the national market on many fronts, with average time a property remained on the market estimated to be 11 weeks and 2 days in Cape Town.”

In KwaZulu-Natal, house price growth slowed over the past nine months, while the Eastern Cape was the strongest performer in the first quarter, averaging 5.7% year-on-year, up from 5.2% in the fourth quarter of 2018.