- The FNB HPI ticked up marginally in July, recording 3.6% y/y from 3.5% y/y in June. This takes the average year-to-date nominal house price growth to 3.5% y/y, slightly worse than the 3.6% y/y recorded in the same period in 2018, but noticeably weaker than the 3.9% annual growth for 2018.
- Positively, FNB Market strength indices revealed a mild improvement in demand, and a persistently slowing pace at which properties entered the market for sale. Consequently, the demand and supply gap narrowed marginally, but remains in favour of buyers. This can be attributed to some easing in buyer despondency post elections, the increased bargain hunting in the higher-priced segments and, more recently, lower interest rates.
- The 2Q19 home transactions data shows that growth in house prices either declined or slowed across all price segments, except in the lowest end where it accelerated. These trends are largely reflective of relatively stronger demand in the lower segments. This is evidenced by agents’ perceptions about buying activity, as well as their estimation of the length of time a property is on the market in the lower price segment (11 weeks and 1 day versus a national average of 14 weeks and 1 day).
- Rental inflation edged up to 4.0% y/y 2Q19 from 3.5% y/y in 1Q19, but remained above headline inflation for a fourth consecutive quarter. This was driven by increases in rentals for freestanding houses and townhouses, while increases for flats eased slightly in 2Q19. By region, the uptick was largely broad-based across eight out of the nine provinces. However, the pace at which rental inflation increased varied markedly across provinces. For instance, rental inflation remains elevated in the Western Cape, recording 7.6% in 2Q19, versus 2.8% in Gauteng.
Please see full report attached.