Property market sentiment down over land reform concerns, poor economy, policy uncertainty - index

Property market sentiment was down over a wide front in the first quarter of 2019, according to Jacques du Toit, property analyst at Absa Home Loans.

After a marked improvement in the fourth quarter of 2018, the level of positive sentiment regarding conditions in the SA residential property market was again lower in the first quarter of 2019, according to the latest Absa Homeowner Sentiment Index.

The index indicates that the property market was affected by tough economic conditions, pressure on household sector finances, ongoing political uncertainty and the issue of land reform. The main positive sentiment-related factors mentioned by survey respondents were that property is a secure asset (33%) and that it still increases in value (18%).

The main negative sentiment-related factors mentioned were political uncertainty (25%), the poorly performing economy (25%) and the issue of land expropriation without compensation (19%).

The first quarter of 2019 saw the level of positive property-buying sentiment declining to 67% from 72% in the fourth quarter of last year.

The main reasons put forward by respondents for the positive property-buying sentiment were that property prices are relatively low and there are bargains in the market (31%); property still increases in value and is a good investment (26%); and it is currently a good time to buy (10%).

About 51% of survey respondents were of the opinion that property prices and economic trends are not favourable regarding selling. However, one of the main reasons mentioned in the first quarter for being in favour of selling property were that property prices are still relatively high and you may get an acceptable price when selling (35%).

Du Toit pointed out that the outlook is for SA's economic growth to rise to only 1.3% in 2019 from 0.8% in 2018. Inflation is expected to remain around the mid-point level of 4.5% of the SA Reserve Bank's inflation target range of 3% to 6%.

Absa, therefore, expects interest rates to remain unchanged during the rest of the year.

"Consumers have in general not been very confident about the outlook for the economy and their own financial positions in the first quarter of the year, while there was uncertainty about the outcome of the general election," said Du Toit.

He added that, if there is a change in property market sentiment after the election, it will be reflected in the levels of market activity, buying patterns, transaction volumes, property price growth and the demand for and growth in mortgage finance.

absa property index

(Source: Absa)

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