The recently released Absa Homeowner Sentiment Index (HSI) indicates that confidence in the South African property market improved by 2%, to end 2020’s third quarter at 76%.
While understanding the overall confidence level of consumers is important, Absa also measures various aspects of these confidence levels referred to as ‘sub-indices’. In the report, sentiments about the current timing for buying, selling, and investing in property is measured.
The report indicates that the market continues to garner positive sentiment towards buying property (buying sub-index) with the current property prices and interest rates being the prominent drivers for this sentiment.
Low property prices are still the number one driver for positive buying sentiment (38% of respondents cited prices as the driver of buying sentiment) with current interest rates the number two driver for buying sentiment (36% of respondents cited interest rates as the driver for positive buying sentiments). Interest rates moved from being the number seven driver in 2019’s fourth quarter (4% of respondents).
The five interest rate cuts this year, amounting to 3.00% (of which 1.50% occurred in the second quarter of 2020 and 0.25% occurred in the third quarter of 2020).
Covid-19-specific mentions continue to decline as a reason for low confidence in the property market while concerns about lacklustre economic performance in general, continues to increase.