In the second quarter of this year, the confidence of home owners in the Western Cape increased, while it decreased in Gauteng and KwaZulu-Natal, according to the latest Absa Home Owners' Index.
In Gauteng, home owners' sentiment dropped by eight percentage points to 77% and in KZN it was down one percentage point to 75%. Home owners' sentiment in the Western Cape remains the highest in the country and was up three percentage points to 79%.
Although the index shows overall confidence in the property market was down three percentage points in the second quarter to 78%, this is still a relatively high confidence score, according to the index report.
"It shows that, despite increasing concern about economic instability and eroding buying power, people still believe in the security of property as a hard asset and source of long-term income generation," the report states.
Buying sentiment had the largest drop of all the sub-indices, reducing from 77% in the first quarter of 2022 to 70% in the second. This is the lowest buying sentiment since the first quarter of 2020 when hard lockdown was initiated.
The report foresees that higher interest rates will impact consumer affordability and may cause many to delay their property purchasing decisions, and opt for renting.
"As such, we are likely to see a continued decline in demand for residential property in the coming quarters, particularly among non-owners and first-time home buyers," states the index report.
"With fewer buyers in the market - especially in the affordable housing segment - house price inflation will continue to decline, making selling less attractive in the medium term."