PROPERTY SHIFT IN SOUTH AFRICA BIRTH KEY TRENDS
The real estate industry has resiliently adapted, as there have been key shifts and trends to watch out for in 2023 after a tumultuous few years of economic challenges and major disruption.
The CEO is optimistic for the year remains but concerned about consumers’ belt tightening against unnecessary spending which is possibly one of the most significant shifts in the property sector the likeliness of more interest rate hikes.
“Following a record low of 3.75% in May of 2020, the interest rate has been steadily rising, with the South African Reserve Bank (SARB) raising its benchmark repo rate by another 75 bps to 7% at its November 2022 meeting – the 7th consecutive rate hike since policy normalization started in November 2021,” said the CEO of Lew Geffen Sotheby’s International Realty, Yael Geffen.
With the goal being for inflation to be stabilized by Q4 in 2024 at 4.5%, we’re probably in for the long haul, which is a bit concerning for the market as higher interest rates mostly impact the sector that has been underpinning the market – property in the R1.m to R2.4m price band.
Geffen listed the following other trends that are very likely to alter the property market in South Africa:
Virtual property shopping will remain: Buyers go online to shop for properties and this is not going to change anytime soon. “Expect to continue seeing very comprehensive listings complete with drone footage and 3D tours as well as the continuance of virtual property tours.
More AI technology in the industry: Algorithms can now go through millions of documents in seconds, accessing property values, debt levels, home renovations, and even some of a homeowner’s personal information.
Bond originators will play a bigger role in mortgage applications: Rising interest rates may push more first-time home buyers to the side. Having access to multiple lenders, an originator can provide the homebuyer with the best deal, which would include negotiating an attractive interest rate.
Millennials will dominate the buyers’ market: Millennials are the largest consumer group in South Africa and likely homebuyers in the future, said Geffen. Whilst, indeed, first-time buyers are once again being priced out of the housing market due to factors such as rising interest rates.
Increased demand for overseas property: Globally, we are seeing increased demand for property in different countries, especially in locations like Malta, Cyprus, and Mauritius, which are viewed as more favorable by investors due to the quality of life they provide, affordable property investment opportunities and, of course, favorable tax regimes.
For South Africans looking to establish their Plan B, the added incentive is that these countries also offer permanent residency.
The luxury market will retain its buoyancy: Growing substantial wealth through owning property will remain a trend for those who can. Real estate has shown remarkable resilience over the years, defying the odds and major disruptions to become the world’s biggest store of wealth, said Geffen.
Source: businesstech
