FNB Quarterly Residential Review

There are signs that lower income groups are experiencing
more strain than the higher income groups at present. This
possibly has less to do with interest rates and more to do
with rampant price inflation of essential items, notably
food.
While FNB’s Property Barometer still indicates superior
activity levels (ignoring the high net worth segment) at the
lower end of the residential market, other indicators point
to some greater stress developing on that end.
Middle-to-lower income bands appear to be net downgraders
in the property market, while the upper income
areas seem to be more in balance, and the high net worth
areas militate towards net up-scaling. Average time on the
market seems to be rising at the lower end while showing
some decline at the higher end, perhaps a sign of the
historic performance differential between the lower end the
and the higher end (in favour of the lower end) dissipating.
However, I do not the believe that the lower priced end of
the market will run into serious trouble. Against the
negatives currently pervasive, it does receive a
considerable degree of support from a flood of new
entrants to the labour market, many of whom join the
property club in the affordable segment before migrating
upward. I believe this can be seen in the Property
Barometer’s estimate of the proportion of buyers by race
group. It was estimated that as at the final quarter of last
year only 51% of home buyers in the former white suburbs
were white. This is a reflection of an economy that is a net
job creator, and much of the net job creation is for
previously disadvantaged groups. What we are seeing in
suburban buying is the effect of this job creation and the
“upward mobility” of a portion of non-white society,
manifesting itself in steady buying in former white areas.
This serves as a strong source of support for the lower end
of the suburban market especially, as it is believed that the
major portion of previously disadvantaged buyers enter the
suburbs at the more affordable end.
This implies a strong source of support for the lower end
market, working against the negative forces. Therefore, I
would merely suggest an end to the superior performance
of what Lightstone calls Mid Value areas, as opposed to a
shift to performance being grossly inferior to the higher
priced end.