NOMPU SIZIBA: The Absa Homeowner Sentiment Index, which looks at consumer sentiment as it pertains to the property market, shows that for the third quarter confidence ticked up two percentage points to 76%. So, what are the drivers of this confidence, and is it sustainable?
To discuss this further I’m joined on the line by Muziwahke Zim, the head of advanced analytics at Absa Home Loans. Thank you so much for joining us, Muzi. Now, what are some of the factors driving confidence in the property sector?
MUZIWAHKE ZIM: Good evening, Nompu and good evening to your listeners. What we actually found is that in the third quarter of this year the main driver of overall sentiment in the property market has been a perceived lower purchasing price of properties, and also the currently low interest-rate cycle.
NOMPU SIZIBA: What are some of the emerging trends you’re seeing developing in the residential property market?
MUZIWAHKE ZIM: The one trend that we are seeing is that sentiment for buying property has essentially recovered to last year’s levels, whereas sentiment towards selling property is still quite low. So we’ve actually seen a widening in the gap of sentiment between buying properties and selling properties. What this is actually doing is it’s starting to provide some upward support on house prices in general.
NOMPU SIZIBA: We heard stories about people using their time during the harder part of the lockdown period to refurbish their properties. How much of a factor has that been?
MUZIWAHKE ZIM: This has been a factor to a certain extent, but what we’ve actually seen in our results would suggest that a lot of people who have been refurbishing their properties aren’t …… [1:35??] to dip into debt or dip into the equity that they have on their properties, although we have seen an uptick of people saying it might actually be a good time right now to be looking at refurbishing their properties.
NOMPU SIZIBA: It does sound like the rental property sector has been hit quite hard, but what do you see in terms of investor appetite to get into rental accommodation?
MUZIWAHKE ZIM: What we saw in the second quarter was a decline in sentiment towards investing in property, and that was due to several factors, the principal ones being the increased vacancy rates and that tenants weren’t necessarily able to pay their rents.
We saw that this sort of resulted in a hit amongst people with rental properties. But what we have seen is that they’ve actually recovered and their sentiment was among the highest in the third quarter. So that’s actually a good news story for us going forward.
NOMPU SIZIBA: We know that the residential property market has struggled to really achieve price increases above inflation. When do you think we’re going to get at least on par with inflation?
MUZIWAHKE ZIM: That’s a very interesting question. To add to your point, over the past 20 years, for most of those years, property prices in general have actually struggled to beat inflation. But what you’ve started to see is evidence of green shoots, at least of what looks like property prices have bottomed out and have started to tick up.
So the low interest-rate cycle has actually stimulated quite a lot of demand, and we are hoping that this is actually going to carry the property market, and prices in general, forward, and enable them to start beating inflation.
NOMPU SIZIBA: We shall see. Muziwahke. Thank you so much, but we’ve run out of time. That was Muziwahke Zim. He’s the head of advanced analytics at Absa Home Loans.