The index report says the relatively"softer" demand is due to higher living costs and deteriorating affordability. In particular, the steep interest rate hiking cycle and elevated inflation have eroded affordability, making it difficult for buyers to save enough for a down payment.
As affordability becomes more stretched, FNB expects home-buying activity to decrease in the coming months. It anticipates house price growth of around 2% this year, compared to 3.5% and 4.2% in 2022 and 2021, respectively. The bank also predicts that price growth could pick up the pace again from the second quarter of 2024, when it expects interest rate pressures to ease.
Furthermore, some lenders are focusing more on this market and are introducing innovations to improve affordability. These include longer mortgage terms and collective buying options.
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