Home / Lifestyle  / All I want for Christmas…by Samuel Seeff

All I want for Christmas…by Samuel Seeff

all i want for xmas resize

2015 has been a busy year for everyone. We at HomeTimes want to know what industry heavyweights are thinking about as the year draws to a close. Some are concerned about buyers, others sellers, and still others society in general. But what is it that they would like to see in their Christmas stocking for a better 2016?

Welcome to All I want for Christmas according to:

Seeff chairman, Samuel Seeff

Seeff, MD, Samuel Seeff.

Seeff, MD, Samuel Seeff.

“All things considered and having regard to the wider economic climate especially, 2015 has been a good year for property. The property sector has also been one of the few economic sectors that has remained in positive territory despite the expected slow-down in sales volumes and overall average price growth compared with last year’s highs.

We are looking to end 2015 and head into 2016 with a still very well balanced market packed with plenty of eager buyers and still fairly tight stock levels. It means that it is still a good time to be a seller, provided that you remain realistic with your asking price.

At the same time, it is also again a good time to be a buyer. The slow-down in sales volumes and lowered price growth means that buyers are still able to find good value, although 2016 will of course be a year of significant economic headwinds and cost increases, including more interest rate hikes potentially from as early as the January MPC meeting, tax hikes and substantial hikes in the cost of utilities. Consumers and buyers will no doubt face a tough year, economically speaking.

Nonetheless, we expect it to be business as usual and those who want to and are able to buy, will continue to do so. This in turn will keep agents busy and the market ticking over. Stock levels are still tight and are likely to remain so at least for the first half of next year. From what we can see, there is no oversupply in sight yet, certainly insofar as the primary housing sector is concerned. Even in the secondary market, many high-demand coastal markets have also seen most of the oversupply of stock mopped up.

The volume of distressed properties that characterised the market and certainly impacted sales volumes and price growth for much of the 2008 to 2013/14 period has now been cleared and given the still conservative lending by the banks (despite the much improved lending landscape since 2007/8), we do not expect this to become a major issue into next year.

No doubt that the weakening economic position and heavy burden on consumers and homeowners will create financial difficulty and some level of distress, but save for economic disasters, we do not expect this to be an issue for the market next year.

Next year we will be entering year three of what we see as the last of a very upbeat three-year cycle. And, while we expect overall volumes to further contract in view of the economic headwinds and price growth to remain tight, it will probably be the end of the really “boom” conditions and the market will settle back again in 2017 unless we see a notable pick up in the economy.

Remember always, for a really good property market, you need a good economy – the two are inextricably linked. Nonetheless, the property market has remained in a cocoon – and note very carefully that we say cocoon and definitely not a bubble that will burst. Property is seen as one of the top stores of wealth, which is why we see high net wealth individuals (HNWI) putting their money into blue chip areas such as the Atlantic Seaboard and paying ever-higher prices – more R20m+ properties have sold this year compared to last year and at higher prices ranging to R111m in Clifton (Seeff sale).

Consider also that South Africa’s top 10 suburbs now boast an average sales price of R10m – quite remarkable. The national average house price also breached the R1m price mark this year. All of this surely points to a very healthy market. The high-demand urban areas, especially the sub-R3m sector, will continue seeing healthy demand and activity.

Stock levels are likely to remain tight because buyers, especially in the R5m+ price sector do not see the incentive of selling, unless they have to – the transaction costs are simply too high (in the case of a top-end R25m property, the seller could be paying as much as R1,9m in transfer duty) – these buyers are therefore opting to stay put, renovating and remodelling, for example.

On the whole, we would argue that the Cape has continued to show some of the best price growth; demand for property here continues to be boosted by locals, but also an influx from inland areas such as Gauteng and even KwaZulu-Natal. We expect the average price growth to end this year on about 8% to 10% generally, but around 7% on the whole. This is very satisfactory in view of the 1.5% to 2% economic growth.

For 2016, there is no doubt that price growth will remain under pressure, simply because buyers and the economy are under pressure and not able to pay more – price growth is likely to track the CPI closely, outstripping it marginally only in the high-demand (and tight stock) areas such as the Atlantic Seaboard. On the whole, price growth is likely to remain very close to the CPI rate.

In terms of trends, the high-demand, blue chip areas such as the Atlantic Seaboard, Cape Town Southern Suburbs and Blouberg areas, Johannesburg’s Sandton and Randburg areas, Pretoria’s Centurion and Eastern areas and the top-end Upper Highway, Berea, Umhlanga, La Lucia and the Dolphin Coast/Ballito areas in KZN are likely to continue to see fairly good trade.

Security estates and complexes will continue seeing strong demand as buyers will continue looking for a secure home – these are also likely to see better-than-average price growth.

Lifestyle areas such as the Atlantic Seaboard, but also areas on the Garden Route, Plettenberg Bay, Knysna etc. will continue to attract upcountry buyers who will want to relocate there if possible. The Cape Town CBD and City Bowl are further “lifestyle” areas where the convenience and cosmopolitan lifestyle is likely to continue driving strong demand and good activity.

Similarly, we are likely to continue seeing strong demand in the apartment sector and this will remain an area of growth for developers.

The rental market will continue to see strong demand with buyers paying ever-higher rental rates, although the yields are likely to again start a steady decline in view of the economic slow-down.”


David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

Review overview