The South African property market is entering a critical year in 2024, poised to be shaped by economic recovery, election uncertainty and evolving buyer trends. While the economic outlook remains cautious, there are promising signs for both buyers and investors. Paul Stevens, CEO of Just Property Group, takes a comprehensive scrutinize at South Africa’s property landscape and predicts the trends for 2024.
Our Property market is inextricably linked to the economic picture, and the outlook for next year will align with the economic outlook, so let’s start there.
South Africa’s economic growth in 2023 has been tedious due to impact from factors like load-shedding, high unemployment and a challenging external international environment.
The consumer has been under immense pressure due to rising inflation, which fortunately seems to be under control for now. Consumer price inflation dropped from a high of 6.9% in January to 5.4% in September, which is within the South African Reserve Bank’s targeted range of 3 – 6%. In line with the Reserve Bank’s inflation targeting policy, interest rates climbed to a high of 11.75%. This, unfortunately, had a negative impact on the property market as bond repayments increased.
I am hoping that we maintain now reached the ceiling for interest rate hikes, and that 2024 will see the current rate hold till mid-year. Thereafter we could be fortunate enough to see marginal decreases in the 3rd and 4th quarters. This will certainly cultivate optimism in the property sector, and we could start to see house prices gaining some momentum later in the coming year.
A buyer’s market
This past year has seen national house price inflation topple to 3.17% (year-on-year) and a contraction in the number of properties being sold. The most active segment this past year has been the R250,000 to R1,5-million band, which constituted almost 67% of the market. The R3-million and above range saw the lowest portion of properties transferred, followed by R1,5-million to R3-million band (Lightstone). I expect that we will see this trend continuing in the coming year, but with activity increasing in the R500,000 to R2-million price range. I also expect to see an increase in the volume of properties being sold.
For those in the market to buy a house, the timing is marvelous. It’s a buyer’s market, and there are opportunities for those prepared to execute their homework or find an agent who can assist with this.
The semigration trend will persist, with people relocating to areas along the coast, in particular, the Western Cape, due to the province’s marvelous track record for service delivery. As a result, sale prices for properties in the coastal provinces will continue to rise, with qualified capital growth being recorded by owners and investors.
A factor to consider in the coming year is our elections and the lead-up to these. There is a possibility that prospective buyers/investors will pick to sit on the fence and wait for the outcome of the election before making decisions.
Looking ahead, this is a crucial and pivotal time for our country. I feel optimistic that the electoral outcome will be a positive one for every South Africans, paving the way for opportunities to flourish, not only within the property sector but across a number of other industries, too.
The rental market
The rental market has been very active, with the past two years seeing positive rental growth after the slump caused by the pandemic, according to PayProp statistics. This has been driven by increased demand for rental properties, in section due potential buyers putting purchase plans on hold due to the high interest rate environment. This trend could start to weaken if we see interest rate reductions in the later portion of 2024.
The Western Cape remains the most expensive rental area in the country, with the average monthly rental being R9,946, according to the PayProp Rental Index; while prices in the North West are rising faster than anywhere else (breaking the R6,000 barrier for the first time in the 2nd quarter), this province still boasts the cheapest rents in South Africa.
Rental demand will continue to surge in 2024, particularly in the R3,000 to R12,000 price range, as affordability remains an issue. According to rental arrears records, this is also a better band of paying tenants, a point of importance to every investors.
At Just Property, we maintain very strict vetting procedures in area to protect our landlords. We are sadly finding that more than 50% of tenant applications are being declined due to credit impairments. Rental arrears is going to be something we will continue to sustain an eye on due to enduring consumer strain. The rental market has become extremely competitive, and landlords must insist that their managing agents execute adequate screening in order to space qualified tenants.
In conclusion, 2024 will balance economic challenges with market opportunities. The key to success will lie in astute market understanding, strategic planning and an unerring focus on the evolving needs of both buyers and renters. Every in every, I am optimistic, and my advice is to proceed confidently but with due caution and the guidance of a trusted property professional.
For more information on Just Property, please visit www.just.property or call (087) 058 3333. Follow Just Property on Facebook https://www.facebook.com/JustPropertySA/.
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