Property Brief - October 2023

In this edition of Property Brief, the positive quarter-on-quarter increase of 3% in the number of home loan applications between July and September 2023 could signal a bottoming out of the downward trend that kicked in Q4 2021, when the Reserve Bank Monetary Policy Committee (MPC) embarked on its restrictive approach. Although the year-on-year figure is down 20%, inflation is now firmly under control and close to the mid-point of the Reserve Bank target range. The MPC is therefore running out of reasons to keep interest rates at 15-year highs and higher than pre-pandemic levels. If interest rates start coming down, it could herald an upswing in the residential property market.

While Q3 2023 saw year-on-year increases in average home purchase prices for all buyers (1.5%) and first-time buyers (1.3%), there was a marginal quarter-on-quarter decline, confirming the persistence of tough trading conditions in the residential property market. Average home purchase prices are only expected to start increasing at meaningful rates once the Reserve Bank relaxes its hawkish monetary policy.

In line with the trends for the number of new home loan applications and average home purchase prices, the average approved home loan values continue to be subdued, with negative quarter-on-quarter and year-on-year numbers recorded in Q3 2023. Further downward pressure is being exerted on average approved home loan values by increases in deposits required for home purchases, both for first-time buyers and repeat buyers.

During the 12 months to September 2023, average home loan values for repeat buyers were significantly higher than for first-time buyers. The largest differences were recorded in the Eastern Cape, followed by the northwestern suburbs of Johannesburg, and the North West province (specifically Rustenburg). For the full edition, click on the link below.

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