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South African residential property is rapidly and unexpectedly recovering – FNB

13 August 2020 11:35 AM
Tags:
Interest rates
FNB
Bonds
Property market
Personal finance
home loans
investing
investments
Property
Buy to let
buy-to-let
property investment
Africa Melane
residential property market
mortgages
Siphamandla Mkhwanazi
Lockdown
property demand
property supply

Pent-up demand, excess supply and record low interest rates are fuelling the unforeseen recovery, says Siphamandla Mkhwanazi.

As recently as May, property research company Lightstone warned of house prices falling by as much as 14.5% in 2020.

Against all expectations, they rose by 1.4% (year to July) instead, according to FNB.

The bank says that home loan applications have recovered to pre-lockdown levels.

Its research, however, still shows property supply far outstripping demand.


Related article - Surprise! The SA property market has roared back, and buyers now want bigger homes


At 7%, the prime lending rate is at a record low.

A mortgage of R1 million results in a monthly repayment of less than R8000.

Africa Melane asked Siphamandla Mkhwanazi – a senior economist at FNB – to talk about the unexpected and rapid recovery of the residential property market.

We’re seeing pent-up demand… buying now when interest rates are low…

Siphamandla Mkhwanazi, senior economist - FNB

We see a lot of activity at the lower end of the market… R750 000 and below… that segment is highly sensitive to interest rates… Affordability has improved… Higher-income households are buying second properties at the lower end in order to rent them out…

Siphamandla Mkhwanazi, senior economist - FNB

There’s a behavioural shift… rising demand for larger, freestanding homes in second-tier cities – Bloemfontein, PE, Kimberley… where you get more space compared to what you would get in, for example, Johannesburg…

Siphamandla Mkhwanazi, senior economist - FNB

It remains a buyers’ market…

Siphamandla Mkhwanazi, senior economist - FNB

Listen to the interview in the audio below.


13 August 2020 11:35 AM
Tags:
Interest rates
FNB
Bonds
Property market
Personal finance
home loans
investing
investments
Property
Buy to let
buy-to-let
property investment
Africa Melane
residential property market
mortgages
Siphamandla Mkhwanazi
Lockdown
property demand
property supply

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