What a year 2017 was! Exactly a year ago I wrote on what to expect in 2017 – and the general message was that it would be a year of stability, not growth. That’s exactly what we’ve seen. Property values have remained mostly stable as buyer demand has declined.
The decline in buyer demand has little to do with the desirability of our local property, and more to do with the economic pressures that buyers are feeling, and their inability to pay the prices that would have sustained the 12-15% property value growth of 2016.
We’ve been fortunate to be spared the additional stress of higher interest rates – but the real inflation rate and increased cost of living have seen a decline in the amount of disposable income.
In addition to the economic pressures, the political shenanigans of 2017 have been a cause for concern. As the average citizen has followed the political developments in disbelief, many have adopted a “wait and see” attitude. And there certainly is a lot to look out for, especially over the next few weeks.
The reality though, is that irrespective of what happens politically in the short term, most buyers will realize that life carries on. If your circumstances dictate that you need to buy a different property, or move to a different location, then that’s what you’ll need to do – despite the political scene.
So what will we see in 2018? We expect that in the first 3-6 months of the year the market will improve slightly as buyers make the purchasing decision they’ve been delaying. Sellers will need to be realistically priced to sell ahead of others – and overpriced properties simply won’t move.
Banks will remain hungry to approve home loans where buyers put down a reasonable deposit. Cash buyers will continue to choose property as an investment safe-haven – and at Harcourts we’re seeing the highest percentage of cash buyers for decades – at well over 50%.
Secure estates will continue to be popular for the obvious security benefits they provide. There will still be excellent purchasing opportunities in developments where you buy now but pay later – thereby benefitting from the increased market value before you actually pay.
There will be a strong market to purchase older properties, both inside and outside gated estates – and upgrade them. Erinvale Golf Estate is a perfect example where buyers can see the potential if they have the courage to deal with the renovation.
South Africans are resilient. We’ll find a way to deal with the political and economic challenges. And our local property market will ready itself for its’ next level of growth once we’re finished with this period of consolidation. As always, real estate remains a safe long-to-medium-term investment. If you need to sell or purchase property then meet the market and conclude the transaction. In every market, there are always great opportunities for buyers and sellers alike.
Hoping 2018 is even better than 2017. As with everything in life – it’s what we make of it! Safe Holidays.
Principal of Harcourts Platinum
Director of Harcourts South Africa