It’s been an undeniably challenging year across the board and, with the total numbers of transfers down almost 30% on last year, the property market was no exception.
However, there were also highlights, including the resurgence of the luxury market in many areas, an increase in foreign investors and a stronger rental market which bodes well for investment buyers.
Residential market
According to Lightstone data, 240 888 residential properties with a total value of R257 billion changed hands this year compared to 340 682 transfers valued at R345 billion in 2022.
First time buyers: Transfers: 101 878 (2022: 144 653)
Purchase value: R75 535 021 812 (2022: R105b)
Repeat buyers: Transfers: 139 010 (2022: 196 029)
Purchase value: R182 340 013 225 (2022: R240b)
Gauteng leads the way in terms of sales volume with seven suburbs boasting the most sales, followed by two in the Western Cape and one in Limpopo but in terms of value, nine out of the top ten suburbs are in the Western Cape – with just Blair Atholl in Gauteng being the outlier.
Semigration
The biggest and most influential trend by far was the migration between provinces, with the Western Cape being the clear winner.
This year saw 1034 households move to KwaZulu Natal, 1971 to Gauteng and 6406 moved to the Western Cape which has had a profound impact on the rental and sales market in the Cape with stock shortages now being seen for the first time in a number of years in the most popular areas.
Commercial Market
With a total transaction value of R54 billion, the commercial sector was a mixed band, but one very positive shift was that, with the highest volume in sales in 2023, retail is clearly on the upswing again after being very subdued since the onset of the pandemic.
What is less of a surprise is that in terms of performance and sales value, the industrial market continues to lead the primary commercial real estate sectors. This sector has been on the up and up for a number of years now, largely due to the fast-growing e-commerce market.
What to expect in 2024
According to Yael Geffen, CEO of Lew Geffen Sotheby’s International Realty, this largely depends on what happens with the interest rate because the ongoing hikes have significantly impacted consumers’ home loan affordability and even their ability to save for a deposit as it’s become more expensive to service existing debts.
“Even if the repo rate remains unchanged, the market is likely to remain subdued for a while although there will be pockets of activity and price growth.
“That said, I’m cautiously optimistic that market could begin to pick up later in the year, especially if we see the start of a downward trajectory in the interest rate.
“More certain is that we will continue to see higher growth in certain regions and metros as the semigration wave continues to areas perceived to enjoy better governance and more reliable municipal services.”
The top end of the market in the Western Cape coastal areas – and especially in Cape Town – has been marching to its own drum and will continue to do so, says Geffen, adding that we will continue to see foreign buyer interest, especially at the top end of the market.
“Traditionally popular investment areas like Europe and London are currently less stable for myriad reasons which are unlikely to be resolved soon so high net worth investors are investing in countries like South Africa where they not only get far more bang for their buck and diversify their portfolios - and they gain exponentially in lifestyle.”
Local investors, especially in the entry and middle markets, are understandably cautious, but Geffen firmly believes that it’s never a bad time to invest in property.
“Even in tough economic times, real estate remains the most stable investment for two key reasons: everyone needs a roof over their heads and property is a tangible asset, unlike other options like stocks which can fluctuate much more.”
However, she does caution that, now more than ever, it’s critical to do one’s homework and to consider factors like: How has the market in my preferred area performed over the past five years, what price band is most active and what types of properties are most popular.
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