FNB Property Barometer – 6 April 2018

Residential Activity Rating strengthens in the 1st quarter of 2018, after 3 prior quarters of decline, but the strengthening was very much a Gauteng story. There have been signs of significantly improved economy-wide sentiment early in 2018, an improvement that many link to the change in the ruling party’s leadership, which translated into a change in the country’s President too. This has been reflected in a significantly stronger Rand, as well as a 1st quarter jump in Business Confidence

This apparently political change-influenced sentiment improvement assists an already-strengthening economy, improvement which was seen through last year in the form of gradually strengthening quarterly year-on-year economic growth, and a rising Leading Business Cycle Indicator which pointed to possible further economic strengthening in 2018.

In our 1st quarter 2018 FNB Estate Agent Survey, we also begin to see indications of improved sentiment in the housing market, which could be further indication of both economic and housing market strengthening to come in the near term.


  1. After 3 prior quarters of decline in the FNB Residential Activity Rating, the 1st quarter of 2018 saw a significant increase, both on an actual as well as on a seasonally-adjusted basis. From a multi-year low of 5.29 (5.40 on a seasonally-adjusted basis) in the 4th quarter of 2017, the Activity Rating rose to 6.18 in the 1st quarter of 2018 (5.79 on a seasonally-adjusted basis).
  2. Agent perceptions of Economic Stress/General Pessimism” have declined significantly, while those experiencing “Positive Consumer Sentiment” have increased sharply, a large portion of agents pointing to the recent change in the country’s political leadership as being a key cause of sentiment improvement.
  3. The strengthening Activity Rating is largely Gauteng-driven, with the Major Coastal Regions of South Africa seeing their aggregated Activity Rating declining slightly in the 1st quarter of 2018. Namibia still has the weakest Activity rating within the broader Rand Area, recording a lowly 4.5.
  4. Estate agents in Lower Income/Priced areas still provide stronger Activity Ratings than those at the High End of the market, understandable given the variety of tax and tariff increases in recent years which have been biased more against high income earners and higher priced homes.
  5. Given the generally good correlation between the FNB Residential Activity Rating and the Leading Business Cycle Indicators for SA, the 1st quarter rise in the Residential Activity Rating suggests a near term strengthening in both the housing market as well as economic growth to come.

Scource: Johan Loos – FNB Household and Property Sector Strategist. (For the full report, please mail brian.woodland@silentpartners.co.za)