The FNB House Price Index was relatively flat at 3.8% year-on-year (y/y) in March, compared to 3.7% y/y in February, according to FNB economist Siphamandla Mkhwanazi.
This takes the first quarter nominal house price growth to 3.8% y/y, slightly softer compared to the 4.1% of the fourth quarter of 2018, but much stronger compared to the 3.2% of the first quarter of 2018.
According to Mkhwanazi, this means that house price appreciation still languishes below inflation, indicative of the continued pressure on household incomes amid a depressed macro-economic environment.
"FNB's valuers rate current residential housing demand as weakening and supply strengthening. We note, however, that the pace at which properties are entering the market has slowed noticeably in recent months," said Mkhwanazi.
"This, however, has not been enough to prevent a modest shift in the balance of demand and supply in favour of buyers. Consequently, we saw a further decline in the FNB Market Strength Index to reach a reading of 49.46, keeping it below the 50 mark for the tenth consecutive month."
The below-50 reading means that valuers rate residential supply as stronger than demand.
"These trends aptly explain the declining real house prices and suggest that the market remains slightly in favour of buyers. Indeed, the FNB Estate Agents Survey results show that between 2016 and 2018, the proportion of properties sold below asking price averaged 91.6%, compared to an average of 85.2% three years earlier," said Mkhwanazi.
"Mortgage advances have been cautiously accelerating for the last 11 months or so, reaching a pace of 4.1% y/y by February 2018, the highest in 31 months. This acceleration, however, still lags behind the pace of other credit types such as unsecured credit and vehicle asset finance."
FNB expects house prices to remain confined within the 3.5% to 4.5% range for an extended period.
"Ultimately, long-term prospects for the property market will pivot on the on the strength of the labour market and whether the current consumer reticence lifts after elections," Mkhwanazi.