The South African property market is expected to face another challenging year as high interest rates and living costs squeeze the affordability levels of buyers.
Even though interest rates are not expected to increase in 2024, the currently high rates will remain in place for most of the year.
Fewer buyers will qualify for home loans and sellers will need to be smart about how they price their properties.
Adrian Goslett, regional director and chief executive of RE/MAX of Southern Africa, says affordability will continue to be an issue in the year ahead, which means that the buyer pool is likely to remain smaller than usual.
“Sellers will need to listen to the advice of their chosen real estate professional and price the home fairly to attract a buyer in 2024.”
However, Goslett notes that each suburb will have its own unique trends, with some in higher demand than others.
“I predict that the semigration trend to the Western Cape and other coastal suburbs will remain strong in 2024. Sellers in these areas are likely to be able to attract higher sales prices than the sellers who are situated in the inland regions.”
Investment in back-up power and water solutions is another trend expected to continue this year as homeowners grow increasingly tired of service delivery failures across the country. This is something sellers will need to keep in mind.
“Homes with off-the-grid features are becoming increasingly popular among buyers. If you are struggling to sell, investing in these types of features in 2024 might help attract more attention from buyers.”
In the face of affordability challenges, Goslett believes joint property buying will gain momentum over the next 12 months.
“Pooling resources can be a great way to make homeownership more affordable – just be sure that whoever you partner with is reliable, as you will still be held liable for the repayments if your co-owner is unable to pay their half of the bill.”
Echoing this, Brad Bendall, head of sales at BetterBond, says the property market should expect to see more collective home buying. As it is, many South Africans are sharing homes and family responsibilities with parents or siblings.
Citing 2020 StatsSA data, he says just over 45 percent of households were already ‘double generational’ – parents and children living together, while almost 15 percent housed three generations in one home.
In light of this, collective saving schemes like ‘stokvels’ offer an increasingly popular way to buy property.
“Some of South Africa’s big banks have launched collective buying home loans that allow up to 12 people to buy together, with each person contributing towards the monthly instalment. While interest rates remain high, we expect to see more stokvel activity next year as South Africans continue to prioritise home buying as a way of securing their financial futures,” Bendall states.
While strong buying activity is expected to continue in certain regions this year – largely owing to semigration and development trends, Goslett says challenges such as affordability, geopolitical uncertainty, and the broader economic landscape must not be overlooked.
Thankfully, though, the local housing market has “proven to be resilient and adaptable”.
“Ultimately, the 2024 South African housing market holds both opportunities and challenges. My advice for those who hope to spot the opportunities is to remain well informed and adaptable regarding your real estate needs in the year ahead and to partner with a trusted real estate professional who can help you navigate through what promises to be an evolving landscape.”