PODCAST | Private property buying dynamics in 2022

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.

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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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