Property Brief - February 2024

In this edition of Property Brief, home loan activity started the year on a solid footing, with January applications virtually at the same level as the Q4 2023 monthly average. This is encouraging as January is usually quite a slow month for many businesses, following on from the summer holiday season. There is nevertheless cause for some concern that, since Q4 2021, home loan applications have been below levels achieved in the last quarter before the Covid-19 pandemic. Unsurprisingly, this downward trend started in the same quarter as the Reserve Bank Monetary Policy Committee commenced interest-rate hikes.

A measure of resilience remains in the residential property market. January saw YOY increases in average home purchase prices for all buyers (4.2%) and first-time buyers (5.1%), whereas in QOQ there was a marginal decline of 1.1% for all buyers and a modest increase of 1.6% for first-time buyers. With the rate of annualised consumer inflation still marginally higher than the rate of increase in home prices, buyers still have an advantage over sellers.

During the 12 months to Jan 2024, the Western Cape retained its position as the top region for home loan values. At an average value of just over R1.5 million, home loan values in the Western Cape were 13% higher than in Greater Pretoria and 75% higher than in the North West province. Compared to the national average, home loan values in the Western Cape are 24% higher. One reason why home loan values have been muted could be due to increased deposits required from prospective homebuyers.

Over the past 12 months, the share of home loans for purchase prices below R1 million has continued to dominate homebuying activity, representing 45% of total home loans awarded. Against the backdrop of high interest rates and subdued economic growth, this trend is not surprising and likely to remain until interest rates start coming down. Fortunately, new job creation has continued over the past two years, which provides the residential property market with a growing base of potential demand. The first three quarters of 2023 saw 811,000 new jobs being created in the economy

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