It currently takes 17 weeks and 6 days on average to sell a home in South Africa

According to FNB Estate Agent Survey, the average time of homes on the market was 17 weeks and 6 days in the 3rd quarter of 2018. This is up from 14 weeks and 1 day in the 1st quarter survey, and from 11 weeks and 1 day at the start of 2016. Even the interest rate cut of March did not change this broad trend, the 2nd quarter 2018 survey straight after that rate cut showing a lengthening in the time on the market from the "pre-cut" 1st quarter survey. The start of an increasing trend in time on the market, at the start of early-2016, coincided with nominal house price growth slowing to levels low enough for real year-on-year house price decline to commence from early that year too ("real" referring to house prices adjusted for CPI inflation rates). 

According to John Loos, Property Sector Strategist for FNB, yesterday's interest rate hike would also not seriously affect affordability in the South African residential and commercial property markets.

This trend of real house price decline since early-2018 has not been halted despite 2 x 25 basis point interest rate cuts, one early in 2017 and one early in 2018. 

At current house price growth rates, a 25 basis point rate hike probably wouldn't stop the trend towards greater home affordability either. In October, the year-on-year growth in value of a 100% new loan on the average priced home rose by a mere 1.5%. We calculate that a 25 basis point rate hike would take this growth rate up to 3.3% year-on-year, a rate which still remains below the CPI inflation rate as well as below nominal per capita income growth. 

Therefore, it would take more significant rate hiking at this stage to cause the resumption of a deterioration in home affordability, given currently weak nominal house price growth. And with supply relative to demand looking set to remain strong in the existing home market, the recent "flurry" of growth in residential units built (26.8% year-on-year for the 3 months to September 2018 according to StatsSA building stats), looks set to be short lived, the New Development Sector to be challenged by improving affordability in the existing home market.