Lew Geffen Sotheby's International Realty explores the current state of the South African luxury property market, focusing on key factors, investment opportunities, and its long-term appeal.
SA property market set for big rebound in 2024
There's a sense of optimism surrounding the South African property market in 2024. Following a period of stagnation, analysts predict a recovery driven by a number of causes. It is anticipated that later in the year, interest rate rises that had restrained buyer excitement, may turn around. Together with strong bank pre-approval rates and a persistent desire for homeownership, these indicators point to a market that is ready for growth.
Property outlook for 2024
The overall outlook for 2024 points towards a seller's market, particularly in the luxury segment. Property sales are anticipated to increase in response to a possible drop in interest rates. This pattern is consistent with the finding from ooba that a significant number (38%) of purchasers were first-time buyers in the 2023 market, despite a drop in overall transactions. This underlying demand is encouraging for the luxury market, since growing buyer interest is expected to be met by a restricted supply of luxury homes.
Factors impacting the local property market
Several key factors are influencing the South African property market in 2024:
Interest rates: A potential reversal of interest rate hikes is expected, which will improve affordability and stimulate buyer activity. The housing market has been slowed down by interest rate hikes to combat inflation. Since September 2023 the rate has remained unchanged. Experts predict future rate cuts to stimulate the market and increase home loan applications.
Increase in co-buying: Co-buying has allowed individuals to enter the property market sooner and share the financial burden of homeownership. It involves purchasing a property together, dividing loan repayments and management costs, and is popular among couples, friends, and business partners, especially for young homebuyers.
Semigration: The trend of South Africans relocating within the country, particularly to coastal areas, continues. The rise in work-from-home is driving a surge in demand for larger, scenic properties, particularly in the Western Cape, where coastal areas are particularly popular among those seeking peaceful surroundings. This phenomenon is boosting the demand for luxury properties in these specific regions.
Foreign investment: South Africa remains a magnet for high-net-worth individuals (HNWIs) on the African continent. The abundance of luxury properties, coupled with a favourable lifestyle, attracts international buyers, further bolstering the luxury market.
According to ooba, over the past year the Western Cape has seen a surge in buy-to-let purchases, primarily driven by foreign buyers seeking luxury properties to rent to tourists.
High home loan approval rates: In 2023, ooba Home Loans reported an approval rate of 83% and an average interest rate that is 0.43% less than prime. Inflation has not slowed down banks' approval of home loan applications, as competition among banks has resulted in better deals with lower interest rates.
Property investment opportunities
With a predicted rise in demand and a limited supply of luxury properties, investment opportunities abound in 2024.
Here are some key areas:
Cape Town: The Southern Suburbs and Atlantic Seaboard have seen significant growth in luxury property sales in 2024, with properties exceeding R20 million attracting both local and international buyers due to its stunning natural beauty and world-class amenities.
Johannesburg: South Africa's economic hub offers a sophisticated urban lifestyle with a growing luxury property market. Investors can capitalise on the increasing demand for high-end apartments and residential estates in Johannesburg.
Coastal Towns: Beyond the major cities, coastal towns like Hermanus, Umhlanga, and Plettenberg Bay are experiencing a surge in popularity due to semi-gration. These areas present excellent opportunities for investment in luxury beachfront properties.
Cape Town’s property prices vs other global cities
Cape Town exemplifies the global appeal of South African luxury properties. Consistently ranked as one of the most beautiful cities in the world, Cape Town offers a cosmopolitan lifestyle with stunning scenery, world-class amenities, and a thriving wine region. Luxury properties in Cape Town, particularly those with ocean views or located in sought-after suburbs, are highly sought-after by international buyers, further solidifying the city's position as a global luxury property destination.
Compared to other major cities, Cape Town boasts a competitive market. For instance, a luxurious apartment with ocean views in Cape Town might be significantly more affordable than a similar property in London, New York, or Sydney. This relative affordability makes Cape Town, and South Africa as a whole, an attractive proposition for international buyers seeking a high-quality lifestyle investment.
Global appeal of Johannesburg luxury homes
Johannesburg offers a unique value proposition for investors in the luxury property market. The city combines a vibrant business environment with a cosmopolitan lifestyle.
Luxury homes in Johannesburg often come with sprawling gardens, private pools, and high-end finishes, all at a price point considerably lower than comparable properties in major international cities. This makes Johannesburg an ideal location for those seeking a luxurious and spacious living environment without breaking the bank.
Why invest in luxury property with Lew Geffen Sotheby’s International Realty
The South African luxury property market in 2024 presents a compelling opportunity for investors and buyers alike. By partnering with a trusted real estate company like Lew Geffen Sotheby's International Realty, you can unlock the full potential of this exciting market and secure a piece of South Africa's luxury property landscape.
Back to All Posts
Comments