Anticipated House Price Inflation (HPI) within South Africa's residential property market is projected to range from 1.8% to 3.5% in 2024, according to property data specialists, Lightstone.
Global residential markets are facing challenges due to geopolitical tensions and economic uncertainties, which are particularly pronounced in South Africa during election years.
According to Paul-Roux De Kock, chief analytics officer at Lightstone, the company's analysis indicates three potential scenarios for HPI in South Africa: 1.84% (low), 2.86% (mid), and 3.57% (high).
Forecast Methodology:
The low scenario is based on a GDP growth rate of 0% and core inflation of 5%.
The mid scenario assumes a GDP growth rate of 1% and core inflation of 4.5%.
The high scenario, being the most optimistic, projects a GDP growth rate of 1.2% and core inflation of 3.5%.
Lightstone's assumptions also incorporate slight variations in the repo rate: a two basis point increase for the low scenario, a one basis point increase for the mid scenario, and a 0.25% increase for the high scenario.
These projections align with forecasts made for 2023, where actual HPI was within the range of predicted values, ranging from 0.9% to 3.7%.
However, ongoing domestic challenges such as load shedding and water shortages, compounded by socio-economic issues, are expected to persist, exerting continued pressure on the residential property market.
While property tax rates remain stable in the 2024 budget announcement, concerns are raised regarding transfer duty exemptions and the termination of solar rebates for residential properties.
Industry experts have expressed disappointment over the lack of increase in the transfer duty exemption threshold from R1.1 million, which they say could have stimulated activity, particularly in the price range preferred by first-time buyers in the R700 000 to R1.5 million price bracket.
Lightstone's analysis indicates that luxury homes are likely to exhibit the strongest HPI performance, with a high scenario of 4.09%, compared to 3.2% for high-value homes and 3.45% for mid-value homes.
Overall, the mid-range scenarios for 2024 are consistent with the HPI trends observed in 2023, signalling a potential improvement across all price bands compared to the previous year.
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