Renier Kriek, Managing Director at Sentinel Homes, anticipates a 2024 revival in the local property market. Post-Covid lockdown, a property boom ensued, yet subsequent challenges restrained property transactions.
The factors causing this decline encompass negative consumer sentiment due to load shedding, economic stagnation, high inflation, rising living costs, and a 475 basis point lending rate increase since the lockdown.
Despite a decrease in first-time buyers, changing life circumstances hint at latent demand.
Looking to 2024, two pivotal events indicate an impending shift. Economists predict Sarb's interest rate reduction in line with global inflation slowdown, paralleling the US Federal Reserve's move.
Additionally, general elections, potentially leading to a national coalition government, may bring fresh momentum. Kriek expects these events to unlock pent-up property demand, foreseeing a significant market activity surge.
Key Trends to Monitor:
Smart Money in the Market:
Savvy buyers recognize the opportune time to purchase, driving market activity.
Decreased mortgage interest rates result from competitive banking practices, catering to a shrinking market.
Wealthier buyers, with better credit records, pay higher deposits despite banks offering up to 105% of the purchase price.
International Luxury Property Demand:
Affluent foreign buyers invest in luxury properties above R20m, especially in Cape Town and coastal areas.
This trend is expected to persist in 2024 as these buyers seek to acquire assets before market dynamics shift later in the year.
Semigration and Coastal Emphasis:
Semigration remains prominent in 2024, contributing to gentrification in smaller towns nationwide.
Market actors focus on coastal areas, with over 80% of building plan approvals currently situated in these regions, anticipating a market shift.
Co-Buying on the Rise:
A noticeable rise in co-buying sees individuals purchasing properties with non-spousal partners, friends, unmarried couples, investors, or for business purposes.
Approximately one in four properties are now co-bought, offering a strategy for younger individuals to enter the market and share risk.
Buy-to-Let Boom:
The buy-to-let market thrives, particularly in the Western Cape, driven by high demand from semigrants.
Insufficient stock and elevated coastal property prices lead semigrants to opt for renting while awaiting positive market signals.
Despite high construction costs, the demand motivates buy-to-let landlords to invest in new homes and apartments.
Investment Purchases:
Almost 11% of all bond applications are currently for investment purchases, exceeding the typical norm.
Stay tuned for updates on these evolving trends shaping the South African property market in 2024 at Property Review.
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