The FNB House Price Index saw growth slow to 1.1% in July, down from a revised 1.6% in June, as household incomes remain pressured by high interest rates and a fragile economy. For the first time in 14 years, the average bond amount declined by 3% in the second quarter of 2023. Among other consequences, it all adds up to lower property transfer duties flowing to the Treasury.

South Africa's housing market remains in the doldrums - a reflection of the wider malaise in a barely growing economy saddled by high interest rates, rampant unemployment and income-chowing inflation.

"The FNB House Price Index growth slowed to 1.1% y/y in July, down from 1.6% in June (revised from 1.7% - Figure 1). This is in line with the continued decline in buying activity, with mortgage volumes now tracking closer to pre-pandemic levels," FNB said in its latest monthly Property Barometer.

"The average bond amount, estimated from deeds data, declined by approximately 3% in Q2 2023, the first decline in 14 years (since Q2 2009)," the bank said.

That is clearly a significant development. Put another way, the average bond amount must have grown or remained the same each quarter over the course of 14 years.

This perhaps points to buyers putting more cash down up front as interest rates rise and banks becoming more frugal about lending, as well as downscaling on the demand side.

As FNB notes, it signals "... a downscaling trend by buyers, along with tightening of lending standards amid higher borrowing costs and affordability constraints".

It may also point to asset depreciation and a loss...