There are strong signs of a positive about turn for South Africa’s property sector during 2024 with key indicators pointing to a shift from a buyers’ to a sellers’ market, according to Tyson Properties’ chief executive, Chris Tyson.
Speaking in the wake of the recent decision by the Reserve Bank’s Monetary Policy Committee to leave interest rates unchanged – the fourth such decision in a row - Tyson is confident that a drop in interest rates is on the cards later this year. This will, inevitably, lead to an uptick in property transactions.
Already, Tyson believes, there were positive undercurrents within what might have seemed to have been a fairly downbeat 2023.
Although the 2023 market was down 29% on average, the Lightstone Report points to the fact that 38% of all transactions were first time buyers indicating an appetite for home ownership is bubbling under.
Already, he says, Tyson Properties has seen increased numbers of enquiries nationally, indicating that change is coming.
“In fact, I believe the shift started on New Year’s Day and will gradually continue over the next 24 months. We entered 2023 with a negative outlook. We were expecting interest rates to increase and even talked of the power grid collapsing. At the beginning of 2024, we are entering the year with a more positive outlook. The sentiment in the market is exciting,” he notes.
The major economic indicators are there for all to see. Despite the Reserve Bank’s warnings, it seems inflation is returning to more acceptable levels as it has in key global markets such as the US and Europe. This suggests that the upward phase of the global interest rate cycle has ended and that local interest rates could follow global interest rates downwards.
Although Lightstone observes that still absent political and economic certainty are key factors when it comes to stabilising the property market, Tyson believes that both are set to settle during this election year which will provide clear answers and end fence sitting.
Improvements to load shedding and more visible work on infrastructure and service delivery are also likely to have a positive impact, Tyson believes. Even the slightest improvement in economic growth and employment will spark this potential upward trajectory.
Although the market in KwaZulu-Natal is doing well, Johannesburg is showing renewed positivity and more activity and the Cape remains buoyant, Tyson acknowledges that one of the major indicators of an upturn remains unchanged at this point.
“For the most part, property prices remain flatlined in many areas which cannot last under present conditions,” he says.
He adds that there is evidence that investors are already in the market looking for bargains ahead of the market’s strengthening with the buy-to-let market showing positive growth, particularly in Cape Town where potential buyers are waiting for new builds.
Semigration – not only in Cape Town but also in many coastal areas – continues and is driving sales in specific locations. During 2023, the Lightstone Report confirmed that the influx into the Western Cape continued. There were 1971 purchases in Gauteng and 1034 in KwaZulu-Natal but 6406 in the Western Cape.
Lightstone also indicates that 21% of buyers were relocating to another town or province or downsizing due to lifestyle changes – a trend that Tyson says will continuously increase in the coming years.
Along with this comes a demand for greener homes in 2024. Availability and the cost of both electricity and water are expected to make homes offering alternative energy such as solar and water saving systems more attractive to buyers as does good security which remains top of both Lightstone and Chris Tyson’s property shopping list.
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