Despite last year’s upheavals – from the firing of Pravin Gordhan to the ratings downgrades – people need places to live and so the property market carries on, regardless of the current political and economic climate.
This is according to Bruce Swain, CEO of the Leapfrog Property Group, who predicts the lay of the land this year – both the good and the bad.
The bad news
Amid expected poor growth in GDP (1% if we are lucky), households will come under increased financial stress and utilities, transport and school fees will likely increase faster than salaries.
“The run-up to the 2019 elections, as well as the ongoing state capture exposes and the woeful performance of Eskom, the SABC and SAA, will weigh heavily on current and potential homeowners, who could well delay their property decision making,” said Swain, who said that while the interest rates remain steady, they could come under pressure to rise as the impact of ratings downgrades takes effect.
“There is currently plenty of stock on the market – particularly over the R2m price range, possibly due to a combination of affordability, political uncertainty and the fact that there is on average a 20% gap between sellers’ asking prices and what buyers are prepared to pay,” he said. “In terms of property prices, year-on-year increases will struggle to keep up with inflation (a 5% to 6% annual increase). That being said, demand for property and house prices are well above 2008/09 levels.”
The good news
“There’s quite a bit of good news, especially for sellers and developers in the lower end of the market,” he said, noting that properties up to R1,5m were in great demand and developers were already targeting this price bracket. “Considering that these properties are more affordable for first-time buyers, and that no transfer duty applies to properties bought off-plan, everyone wins.”
While the property prices are showing some decline in general, there are several hotspots around the country that are bucking the trend.
The Western Cape, Midrand and the KwaZulu-Natal North Coast are firm favourites.
“Sellers with accurately priced properties in these markets are often getting their asking price, and doing so in record time,” said Swain. “These areas are increasingly in demand due to a number of factors ranging from perceived safety, better-run municipalities, centrality and scarcity which can make it tough for buyers.”
Swain advises sellers to remain realistic in their asking prices and for buyers to be prepared when house hunting: “Make sure you’ve got bond pre-approval, have a deposit in place and know where you want to buy and what you can afford to spend.”