Rising sentiment bodes well for the market
Category Property Markets
The latest Absa Homeowner Sentiment Index (HSI) showed that positive sentiment regarding residential property market conditions in the country had increased to 77% in the 4th quarter of 2018 from 72% in the 3rd quarter. This, on the back of better economic growth for the 3rd quarter and a clear indication that good economic growth is necessary for the property market to improve.
ABSA expects the year to remain positive and for sentiment to possibly strengthen further which could translate into higher sales activity, buying patterns, transaction volumes, property price growth and the demand for and growth in mortgage finance.
The bank expects nominal house price growth of around 4,9%, but once adjusted for inflation, it means fairly flat growth. It expects household mortgage balances to grow by about 5%, hence alluding to a still positive lending landscape.
With a level of stability returning to the economy and interest rates, President Ramaphosa's SONA 2019 address was well received. We have seen positives such as business confidence stabilising and increasing foreign investment. At the same time, the president continues to demonstrate a commitment to cost-cutting, dealing with corruption and maladministration and boosting economic growth.
While Finance Minister, Tito Mboweni presented a fairly positive budget, he reiterated that economic recovery will take time and there are no quick fixes. For the property market, that means that while the outlook is more positive, it is still trading fairly flat for the time being.
Should you still be selling in this market? Yes, it is still a good time to sell provided you are market related with your asking price. There will always be buyers regardless of the state of the economy and it is always a good time to take advantage of the demand. Remember, if you decide to wait for the market to turn before selling, you may also have to pay a higher price.
Should you be buying in this market? With the flat price growth and the mortgage lending landscape still in positive territory, buyers should be able to find this a good market to buy in.
Home is our Story and property our passion. A reminder that the new General Valuation roll for the City of Cape Town is open for inspection and objection from 21 February 2019 to 30 April 2019. If you would like an updated valuation of your property for comparison, please feel free to contact us.
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Author: Gina Meintjes