Early signs may be emerging of improving housing demand conditions over and above strong summer seasonal factors.

Key leading economic indicators are pointing in the direction of a near term economic growth strengthening. This would likely strengthen employment, and in turn Household Sector Disposable Income growth. In addition, interest rates have not risen further since March 2016, while real house prices (house prices adjusted for CPI inflation) have been in decline of late. This has translated into improving housing affordability on a national average basis. Improved housing affordability combined with improving economic growth should be a catalyst for some strengthening in the demand for housing.

One of our key residential indicators suggests that housing demand may be strengthening. However, 2 others haven’t yet pointed to strengthening, so it is far from a “clear cut” strengthening picture yet, but strengthening, we believe, nevertheless.

THE FNB RESIDENTIAL ACTIVITY RATING BEGINS TO STRENGTHEN FOLLOWING A PRIOR DECLINING TREND

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