SA's residential property market outlook for the rest of 2019
Current economic and socio-political challenges aside, some 'green shoots' of renewed activity have appeared in the residential property marketplace in certain regions, which is over and above ongoing, sustained activity experienced in various key hubs.
The market has definitely picked up, with increased movement in correctly-priced properties, while international buyers are also more active.
Johannesburg
In the Hyde Park area in Johannesburg, there are reports of a growing number of enquiries and more buyers evident in the marketplace.
While it's still somewhat of a buyers' market, there is good uptake of properties which are priced right. It appears that many buyers who have been sitting on the fence are now getting on with their lives and making buying decisions.
Pretoria
Well-priced properties are experiencing increased activity, while units in popular Menlyn Maine continue to be snapped up by urban professionals and other aspirant home buyers. In addition, sales in mixed-use developments in the Pretoria region have surprised on the upside over the past six months.
KwaZulu-Natal and Western Cape
Among flourishing areas which continue to experience brisk growth in house prices are the new suburbs along the Cape's Western Seaboard.
Another area which showing sustained activity is the rapidly expanding North Coast in KwaZulu-Natal which, with its close proximity to King Shaka International Airport and proliferation of secure lifestyle estates, a major business node in Umhlanga and abundance of good schools, continues to attract local buyers as well as large numbers of upcountry home buyers.
Notably, while the Western Cape remains the top-performing major region overall, KwaZulu-Natal is showing the most resilience in the upper price band.
In regard to the major metro, Cape Town and Nelson Mandela Bay continue to outperform South Africa's national average of 4.3% with house price growth of 7.5% and 5.3% respectively (average for January to November 2018). See the graph:
More trends
It's also interesting to see that the rebound in house price growth in the Northern Cape continues to gain momentum, at 3.39% for the year to date (January to November 2018, Lightstone)
Another positive trend which is a continuation since mid-2017 is that first-time buyers accounted for 52% of all mortgages extended by Ooba in January/February this year. Encouragingly, the average deposit required is down to only 12.7% (January/February 2019) of the buying price, levels last seen prior to the 2008 recession, while nearly 58% of all bond applications are for 100% bonds.
While the outlook for 2019 appears to be more promising, there is an unusually high number of major events which could potentially impact the performance of the local residential market.
Locally, economic activity appears to be gradually strengthening. Nonetheless, uncertainty ahead of the general election is keeping some investors and property buyers on hold for now. Should the economy and political environment favour on the upside in the months ahead, the outlook for the housing market will undoubtedly improve.
Furthermore, it is hoped that dampening of inflationary pressures may result in a hike in rates being delayed until late-2019 or even early-2020.
Activity in the housing market is likely to deliver another modest performance this year, with growth in prices remaining in low single digits. However, savvy investors are taking the opportunities presented in the current market to make astute investment choices.