By Tony Clarke
After a notable dip mid-year, Absa’s Homeowner Sentiment Index (HSI) for the third quarter (3Q) 2021 reported a remarkable recovery in confidence levels in property. This matches Rawson Property Group’s experience of market activity, and suggests that 2022 could be a good year.
I always say, no matter what’s happening in the world, people need a roof over their heads. It was very interesting to see that opinion directly echoed by respondents to Absa’s survey.
Absa found that 53 percent of survey participants believe that property always increases in value, while 52 percent believe that property is – and has always been – a secure asset. These are not, however, the only reasons cited for improved homeowner sentiment, which ended Q3 2021 at 82 percent (5 percentage points higher than the previous quarter).
Gauteng scored highest for property market sentiment, climbing 4 percent to 83 percent overall. The Western Cape came in second at 82 percent (after a 1 percent increase), while KwaZulu-Natal climbed 6 percent to reach third place at 79 percent.
It’s interesting to note that, although buyer sentiment rose six percent from quarter two to quarter three, it still ended one point lower than quarter one. This isn’t entirely unexpected – 2020’s boom of buyer enthusiasm had to level off at some point. We expect it to hover around this point for some time to come, despite November’s interest rate increase.
Investors are currently the most positive about buying property, with sentiment levels at 88 percent. Sentiment towards buying, instead of renting, reached its highest levels since the inception of Absa’s HSI (83 percent) despite some reservations over job security and the reduced flexibility offered by home ownership.
The HSI found non-first-time-home owners to be the least positive about buying property (although they score the highest for renovation sentiment). According to Clarke, however, activity on the ground paints a slightly different picture, with significant action from repeat buyers in recent months.
The property market in 2020 was largely driven by first-time buyers, but we’ve had a lot more repeat buyers entering the market in 2021. We believe this to be a direct result of improvements in sentiment towards selling property – something most existing home owners need to keep in mind when preparing to buy.
While only 38 percent of Absa’s respondents felt current market conditions to be appropriate for selling, this was 4 percent higher than the previous quarter. This seemingly modest rebound brought sentiment back to pre-lockdown levels, supporting Clarke’s on-the-ground experience of returning seller confidence.
We’re seeing more and more very favourable sales happening for sellers these days particularly when properties are priced and marketed strategically. I don’t think 2022 will bring a complete turnaround for buyer/seller dynamics, but I do think we’re going to see a more level playing field moving forward.
This returning balance should also begin to stabilise the demand-to-supply ratio, which has been leaning heavily towards demand since lockdown. Under normal circumstances, this may cause property price growth to slow, but he does not believe this will be the case for 2022.
I think we’re a lot more likely to see a slow and steady return to healthy appreciation after a long period of suppressed growth. This will, of course, depend on some external factors like economic recovery, but I firmly believe that we have what it takes to make this a truly spectacular year.
Tony Clarke is the managing director of the Rawson Property Group.
*The views expressed here are not necessarily those of IOL or of title sites.
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