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FNB Property Barometer - Residential Maintenance and Upgrades

The Home Maintenance and Upgrades market remains vastly improved from 2008/9 levels, and as at the 2nd quarter of 2015 it appeared to remain on its steady strengthening path which it has been on since around 2013.

According to the FNB Estate Agents Survey, agents do perceive a very slight increase in the “only attending to basic maintenance” category, but it is too little and too early to be of concern. More significant is their perception of further increase in the top level of home investment, namely “value adding upgrades”, along with further increase in the top 2 levels combined, namely “value adding upgrades” and “maintaining and making some improvements”. This keeps the overall Home Investment Confidence Indicator rising.

Given what has recently happened to consumer confidence, though, near term trends in home investment will be interesting to watch. The FNB-BER Consumer Confidence Index for the 2nd quarter of 2015 dropped to its lowest levels in around 15 years, and this could signal a more cautious approach to consumer spending levels in general.

In addition, we expect interest rate hiking to resume in the near term as CPI inflation accelerates back up to near to the SARB upper target limit.

When tougher financial times arrive, due either to a weak economy or rising interest rates, Home maintenance and upgrades are often deferred to a later date, as more pressing expenditure pressures take preference.

All of this could possibly mean that the upward trend in home maintenance and upgrade levels could slow, or come to an end, later in 2015. So far so good, though. The situation continues to appear healthy, with good levels of maintenance, significant upgrades, and not a lot of speculative activity.

The Home Maintenance and Upgrades market remains vastly improved from 2008/9 levels, and as at the 2nd quarter of 2015 it appeared to remain on its steady strengthening path which it has been on since around 2013.

Agents do perceive a very slight increase in the “only attending to basic maintenance” category, but it is too little and too early to be of concern. More significant is their perception of further increase in the top level of home investment, namely “value adding upgrades”, along with further increase in the top 2 levels combined, namely “value adding upgrades” and “maintaining  and making some improvements”. This keeps the overall Home Investment Confidence Indicator rising.

Given what has recently happened to consumer confidence, though, near term trends in home investment will be interesting to watch. The FNB-BER Consumer Confidence Index for the 2nd quarter of 2015 dropped to its lowest levels in around 15 years, and this could signal a more cautious approach to consumer spending levels in general.

In addition, we expect interest rate hiking to resume in the near term as CPI inflation accelerates back up to near to the SARB upper target limit.

When tougher financial times arrive, due either to a weak economy or rising interest rates, Home maintenance and upgrades are often deferred to a later date, as more pressing expenditure pressures take preference.

All of this could possibly mean that the upward trend in home maintenance and upgrade levels could slow, or come to an end, later in 2015. So far so good, though. The situation continues to appear healthy, with good levels of maintenance, significant upgrades, and not a lot of speculative activity.

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