Major shift for South Africa's property market is coming
Category The Property Market
Key indicators show that South Africa's property sector will shift from a buyer's to a seller's market in 2024.
Chris Tyson from Tyson Properties said that interest rates are expected to drop later this year, leading to an uptick in property transactions.
He added that there were still positive undercurrents in a somewhat downbeat 2023.
According to Lightstone, the 2023 market was down 29% on average, but the Lightstone Report showed that 38% of all transactions were first-time buyers, showing an appetite for home ownership is bubbling under.
Tyson said that change is coming, with the group seeing an increase in enquiries nationally.
"In fact, I believe the shift started on New Year's Day and will gradually continue over the next 24 months. We entered 2023 with a negative outlook. We were expecting interest rates to increase and even talked of the power grid collapsing," he said.
"At the beginning of 2024, we are entering the year with a more positive outlook. The sentiment in the market is exciting."
Inflation seems to be returning to more acceptable levels in South Africa, the US and Europe despite the Reserve Bank's warnings.
This means that the global interest rate hiking cycle has likely peaked and that local interest rates could follow global interest rates downwards.
Despite political and economic uncertainty weighing heavily on those in the property market, Tyson said that these fears are likely to settle during this election year, which will provide clearer answers and end fence-sitting.
Less severe load shedding and more visible work on infrastructure and service delivery are also expected to have a positive impact. At the same time, a slight improvement in economic growth and employment will also spark a potential upward trajectory.
Hotspots
Tyson said that KwaZulu-Natal saw a strong performance, while sentiment in Johannesburg improved and buoyancy continued in the Cape.
Tyson has, however, admitted that the main indicators of an upturn remain unchanged at this point.
"For the most part, property prices remain flatlined in many areas, which cannot last under present conditions," he says.
He added that there is already strong evidence that investors are looking for bargains ahead of the market's strengthening, especially in the buy-to-let market and Cape Town, where potential buyers are waiting for new builds.
There is also expected to be greater demand for greener homes in the year, with the availability of backup electricity and water expected to make homes attractive to buyers. This is also the case for good security, which remains for both Lightstone and Chris Tyson's property shopping list.
Author: Luke Fraser