FNB barometer – Feb 09

It asks their opinion on a wide range of issues about the property market, the main question asked is how they experience demand activity on a level of 1 to 10. For the second successive quarter, this level has risen mildly from 4.59 in the final quarter of 2008 to 4.8 in the 1st quarter of 2009. Another positive is that for the second consecutive quarter emigration selling as a percentage of total selling has declined significantly.

In deriving insights from the Barometer FNB notes that while demand is said to be recovering, much of the rest of the Barometer survey results still point to large-scale financial pressure amongst homeowners. Affordability is very much an issue and selling to downscale is high and not appearing to subside just yet, selling in order to upgrade is low, renovations and maintenance to homes are said to be increasingly limited to the essentials. Non-essential holiday home and buy-to-let buying remains on the back foot, and first time buying too is a far cry from yesteryear.

As such, the survey may be just starting to support the FNB view of demand being able to respond in a mildly positive way to actual and prospective interest rate cuts, despite a bleak economic environment. However strict bank lending criteria survey supports FNB's view that the significant oversupply on the market is not set to disappear immediately. It could therefore be a considerable time before oversupplies are mopped up and the market is back in balance, and this results in the expectation of continued house price deflation for most of 2009.

FNB Residential Property Barometer