DURBAN - After a challenging 2018, but with the repo rate remaining stable, the outlook for 2019 started off on a fairly positive note.
Property prices grew by just under 4% nationally last year and the outlook for 2019 is about the same. However, according to the FNB house price index, average house prices are still up 90% on the pre-boom prices of January 2001. The year ahead is likely to be characterised by a number of highly significant events which could have a substantial impact on the performance of our local property market.
In addition to the unchanged interest rate there have been several other short-term, positive developments. Although still low, economic growth is expected to be at least double the dismal 0.7% recorded in 2018. We have recently had two petrol price cuts totalling R3 per litre with another reduction on the cards for early February. We also enjoyed renewed rand strengthening which has helped to dampen inflationary pressure along with pressure to continue the rate hiking cycle in the near term. The forecast for mild interest rate hikes has now been pushed out to late 2019 or possibly early 2020.
As a result, economic and residential property activity seems to be rebounding, albeit modestly, as savvy buyers capitalise on sound buying opportunities. The ‘sweet spot’ in our North Coast property belt seems to be between the R3.5m and R6m price range where we are seeing more buyers than a couple of months ago. Nationally, the hottest property markets include our North Coast property belt - spanning uMhlanga, Sibaya, Ballito and beyond, and Hyde Park and Pretoria.
These areas have recorded strong growth in activity in December 2018 compared with December 2017 with KZN’s North Coast belt and Pretoria having particularly surprised on the upside in the development space over the past 3-6 months.
KZN is well priced and well positioned from a commuting perspective and therefore still experiencing semigration, Gauteng is showing good activity largely because it remains the financial hub of the country and attracts the upwardly-mobile, career-minded home buyer, while Pretoria and surrounds are active as people invest in precincts such as the Menlyn Maine, which offers attractive and convenient, lifestyle living.
Property remains popular despite weak economic conditions due to it still being recognised as the basic cornerstone of wealth creation while in the higher-end, purchasers continue to invest their cash in the lifestyle benefits of coastal areas. However, positive sentiment is tempered by general price sensitivity among buyers with many adopting a wait-and-see approach in the lead-up to the budget announcement and elections expected to take place in May 2019.
If the economic and political environment leans in a favourable direction, we will hopefully retain our investment grade rating and this will positively impact our local property market.
The current market presents a unique opportunity for savvy investors to secure long-term investments at good value in the most appealing and scenically beautiful locations such as those found along our burgeoning North Coast and the Cape’s Atlantic Seaboard.
Gareth Bailey is Pam Golding Properties area principal for Durban Coastal. For further information visit www.pamgolding.co.za or contact Pam Golding Properties KZN at 031 207 5584.
- THE MERCURY