How Do South Africans Feel about Property in 2017
Category Property market overview
A survey by ABSA has revealed how South Africans feel about buying, selling, investing, renting and renovating property, as well as property market conditions in general.
The economy
In the first quarter of 2017, the South African economy entered a technical recession after experiencing two consecutive quarters of negative growth. This was brought about by poor economic performance in key sectors like wholesale and retail trade, manufacturing as well as financial and business services.
Major political developments like the sacking of Finance Minister, Pravin Gordhan, and policy uncertainty disrupted the exchange rate and financial markets. These factors and increased institutional and economic risks resulted in the country being downgraded to “junk status” by two major ratings agencies. For the rest of 2017, economic growth and confidence levels are expected to be subdued, with further depreciation in the exchange rate and average inflation of around 5.3% expected.
The one bright spot for consumers was the interest rate cut in July, with the expectation of further cuts later in the year.
The consumer sector
Lower food prices and fuel prices has resulted in inflation slowing in the first half of 2017. This, together with lower interest rates has eased the financial strain felt by many consumers although this has been tempered to a certain degree by tax increases and a struggling labour market.
Conditions in the consumer sector will in the rest of 2017 be driven by trends in prominent macroeconomic variables such as economic growth, employment, inflation and interest rates, which will affect household income, consumption expenditure, confidence levels and the demand for credit.
ABSA Homeowner Sentiment Index
The newly launched ABSA Homeowner Sentiment Index determines the level of positive sentiment regarding buying, selling, investing, renting and the renovating of property, as well as property market conditions in general.
Despite the economic headwinds facing the country, the Homeowner Sentiment Index found that South Africans were largely positive about the residential property market up until the third quarter of 2016, with 83% of consumers surveyed at the time having a positive perception of the property market. However, as consumers experienced financial pressure due to deteriorating economic conditions towards the end of 2016 and into 2017, this sentiment began to decline and ended on 74% in the second quarter of 2017.
Although most respondents were in the latest survey still confident that property is a secure asset, there were concerns regarding factors such as the state of the economy, politics and the impact of the country’s junk status.
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Author: Private Property
