“If the market strength index gets to a level of 50 or above 50, it means that demand is rated as better than supply on aggregate. We’re not quite there yet, we’re nearing 48 so some way to go,” Loos, a household and property strategist at FNB, told CNBC Africa on Monday.
“They have been pointing to a steady, improving demand. They’ve also been perceiving a diminishing supply or a more constrained supply and both those elements are necessary for a better market balance.”
The index, currently at 47.32, can be used as an indicator of business confidence in the South African housing market.
Meanwhile, the FNB house price index has indicated a year on year growth rate for August. It increased to 6.4 per cent from 6.3 per cent in July.
Loos believes that, in general, the country’s housing market is in a relatively nice place.
“Everybody is a bit more comfortable, all the market players, than they were a few years ago. We’re very much inflating in line with CPI inflation which is 6.3 per cent – our year on year price index going up 6.4 per cent, so certainly no fireworks but it’s solid. There’s no speculative activity of note in the markets,” he said.