Rising interest rates have challenged the property market in recent years with many aspiring homeowners forced to put their dreams on hold and new buyers qualifying for smaller bonds than they had hoped.
Even though the repo rate has held steady and the hiking cycle is believed to be over, market activity will remain subdued it starts coming down.
But it is not all about interest rates; there are a number of other significant factors on the horizon for the property market in 2024, says Byron Thomas, founder and chief executive of Byron Thomas Properties.
1. Geo-political situations
With the world in turmoil, South Africa’s socio-economic issues seem like less of a deterrent than before. Emigration has slowed down and many South African expats are returning.
New entrants into the job market will have a positive spin-off for investment buyers as demand for rentals should also start to increase, providing decent yields that have not been seen for a few years, he says.
Furthermore, increasing numbers of businesses require employees back in the office.
“Areas situated close to ever-expanding business nodes, as well as those in close proximity to top private and public schools, hospitals, transport routes, and major highways will remain in high demand.”
2. South Africa’s national election
The outcome of the upcoming national elections cannot be predicted but Thomas says the results will more than likely usher in some critical shifts in power. These will have short-term effects on the property market and longer-term effects on the South African economy.
The upside of this uncertainty is that civil sentiment is quickly shifting towards positive outcomes emanating from political changes.
3. Infrastructure and costs
South Africa’s suburbs appear to be going through short-term pain for long-term gain with ongoing infrastructure upgrades. New water pipes, sewer lines, pothole repairs, and electrical substations have been, and continue to be, installed.
“While we would all like any form of outage to be a thing of the past, this will unfortunately not happen overnight.
“The private sector also seems to be stepping up, with initiatives such as the 'Pothole Patrols', and improved community security surveillance,” he says.
In addition, homeowners have taken power cuts and poor infrastructure into their own hands, installing solar/backup power solutions, boreholes, and water storage tanks. This reduces their reliance on municipal services while increasing their use and enjoyment of their homes.
“Reducing reliance on the grid has its costs but also has its benefits. This is, of course, not first prize, but South Africa is not the only country facing infrastructure challenges. The grass may seem greener but there is no utopia anywhere in the world.”
4. Stock levels are dropping
From 2015 to 2017, the country experienced a ‘sellers’ market in which demand outweighed supply. Now, however, stock levels are slowing and buyer demand is increasing. This bodes well for property prices.
“Interest rates in 2015 to 2017 were between 9.5 percent and 10.25 percent, and forecasts indicate that South Africa is heading back towards those levels over the coming years.”
However, Thomas notes that much still needs to happen before there is a complete shift from a buyer’s market to a seller’s market.
“But the indications are pointing in this direction which is very good news indeed.”
5. Value for money and quality of life
Property prices are currently at an affordable level, offering great value for money and a lifestyle that is not easily replicated anywhere in the world. Many suburbs have introduced community and security initiatives, thereby increasing their desirability.
“The property cycle always turns and 2024 is expected to bring growth...across both the freehold and sectional title segments. The time to buy is sooner rather than later.”