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Home buying dynamics in SA is the focus of this edition of the Business Day Spotlight. 

Our host Mudiwa Gavaza is joined by Siphamandla Mkhwanazi, a senior economist at FNB. 

FNB says its House Price Index growth moved slightly lower in May, averaging 3.7% year-on-year from 4% in April. 

Mkhwanazi explains that downward pressure on prices is coming from the lower- and middle-priced segments, while pricier segments continue on a recovery.

Join the discussion: 

The bank’s data to March shows that free-standing properties are faring better than sectional-title properties, which is consistent with the ongoing changes in housing needs. 

“We expect interest rates to increase by a further 100 bps in 2H22, on the back of a fast-deteriorating inflation outlook. This suggests a less supportive medium-term environment for home buying activity,” says Mkhwanazi. 

With rising interest rates, home ownership is increasingly out of reach, especially for first-time buyers. Much of the purchasing activity is being done by those who already have homes. To assist, Mkhwanazi says financial institutions have started to offer 30-year mortgage options as a cheaper alternative with regard to servicing costs. The standard in SA has traditionally been 20 years. 

Topics of discussion include: new data from FNB’s House Price Index, the effects of a tough economic environment on the residential property market, ways in which financial institutions can help with making home ownership more accessible, and an outlook for the sector. 

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