With much still riding on the outcome of the ANC elective conference later this month (16-20 December 2017) which, coupled with the Budget Speech in February next year (2018), will impact on business and consumer confidence and market sentiment in general, it is expected that South Africa’s residential property market will continue to maintain its resilience – particularly in major metros and key hubs.
Dr Andrew Golding, chief executive of the Pam Golding Property group, said: “From a housing perspective, the fact is there is a pent-up demand from a groundswell of aspirant buyers wanting to acquire a foothold in the property market, while others in the marketplace – both first-time buyers and existing homeowners – are seeking homes to buy or rent as career and lifestyle changes dictate a change in address.”
He said that another favourable indicator is that developers are continuing to bring new products to the marketplace across a range of price bands in response to the demand for residential property in key growth nodes in Cape Town, Johannesburg – including the ‘New North’ of Fourways, Pretoria East, the KwaZulu-Natal North Coast and also Port Elizabeth.
Notably in PE, according to Lightstone statistics, some 90,000 new homes are entering the housing market each year, providing accommodation mainly for the sub-R1 million price range.
“In the major metros and economic hubs it is evident that densification is a factor which will increasingly drive demand in the residential property market. Interestingly in Cape Town, in line with this trend, the Municipal by-laws were recently amended, thereby giving home owners the right to build a second dwelling on most properties, as long as certain criteria are met,” Golding said.
“In addition, the live, work, play, shop concept continues to gather momentum partly due to major cities’ increased traffic congestion, while the transition to ‘green’, energy and water-efficient homes will gain impetus not only for the purpose of sustainability and drought – as still evidenced in the Western Cape – but also due to the rising cost of utilities.”
Other factors which will continue to fuel activity in the residential property market incorporate a number of ongoing trends. These include an increasing demand for sectional title properties in convenient locations close to the workplace and all amenities from first-time buyers and those downscaling or seeking a more manageable, lock-up-and-go property with reduced operating costs to cater for a more flexible lifestyle.
“We also anticipate a continued demand for secure estate living, both freehold and sectional title, as well as homes catering for the ever-growing, retirement market – those wishing to retain an active lifestyle and enjoy a range of amenities on site,” Golding said.
Commenting further on the market, Sandra Gordon, Pam Golding Properties senior research and market analyst said: “When we review the latest Pam Golding Residential Property Index we note that national house price inflation has averaged at 4.14% during the year to date (Jan – Oct 2017), losing some momentum in recent months with an increase of 3.9% in Q3.
“While average house price growth for 2017 is likely to be lower than the average consumer inflation rate it is important to remember that this is the average growth in prices for the entire national housing market incorporating 6.5 million homes in various locations and of various sizes and types.
“As an immovable asset, housing markets are hyper-local and house price growth is determined to a large extent by the level of economic activity in the area as well as migration trends, local housing availability and lifestyle trends. While there are overarching national trends, it is important to understand the dynamics of local housing markets and hence the likely performance of house price inflation in any particular area,” Gordon said.
“To illustrate this consider that regional house price growth ranges from +9.9% (Jan-Oct 2017) in the Western Cape to Gauteng at 2.8% for the year to date.”
Equally, Gordon said, there is diverse performance across price bands – with homes valued at less than R1 million showing price growth of 7.5% while the top-end of the market (above R3 million) declined by 0.2% during the year to date.
“When combining these two factors, the strongest growth in house price inflation is experienced by homes valued at under R1 million in the Western Cape, which are still registering robust growth of 13.6% during same period.”
This serves to highlight the fact that the average performance of the national housing market does not reflect the realities of the housing markets many South African homeowners are experiencing and also highlights the importance of understanding the trends in the national housing market when making decisions to sell or purchase a home, Pam Golding said.