Despite the negativity South Africa’s real estate industry has faced over the past few months, Berry Everitt (CEO of the Chas Everitt International Property Group) believes that the property market won’t “fall off a cliff” in the upcoming year but it will face its own set of challenges.
“The simple reason for this is real estate’s remarkable and well-documented ability to re-balance and create opportunities for both consumers and property practitioners in virtually any economic or political circumstances,” he says.
“For example, when economic growth is slow as it has been in SA for the past few years, or when interest rates rise and it becomes difficult for new home buyers to obtain credit, there is usually a spike in demand for rental homes, which opens up opportunities for buy-to-let investors and property developers, as well as estate agencies with a track record of good property management and rent collection. At the moment, SA is also experiencing rapid youth urbanisation which is further fuel for this trend.”
Everitt believes that the property market will be affected by business and consumer confidence levels, which will differ regionally and from area to area: “… overall, 2018 will be a buyers’ year – and buying is what the smart investors and consumers will be doing, whether they are first-time buyers getting a toehold in the market, buy-to-let investors building up their portfolios or existing homeowners upgrading to bigger or more luxurious properties“.
“Indeed, I foresee that there are going to be some amazing opportunities available for those able and willing to look beyond SA’s immediate political and economic woes to the next three to five years, just as there were after the Global Financial Crisis in 2008/09.”
The Chas Everitt International group expects property price inflation to remain low in 2018 with the possible exception for certain isolated ‘hot spots’; interest rates to remain relatively stable with home loans to be readily available albeit under strict credit-granting guidelines.
As a group, he says, Chas Everitt International is expecting property price inflation to remain low in 2018 (except perhaps in certain isolated hotspots); interest rates to remain relatively stable and home loans to be readily available albeit under strict credit-granting guidelines. Buyers with cash will nevertheless be in the strongest position.
“As for demand, we expect that lifestyle will continue to drive flourishing sales in top-end security estates, and that there will also be very strong demand at the low end of the market in the R400 000 to R600 000 price range, driven by first-time buyers and by investors purchasing buy-to-let-properties, as well as repeat buyers who are scaling down to smaller homes that require less maintenance and are cheaper to run“.
“Due to the increasing pace of urbanisation, we also foresee more densification taking place wherever this is possible in high-demand, central suburbs that are close to all amenities and well-served by public transport. Developers will once again be on the hunt for older homes on large stands that they can rezone for multi-unit sectional title and cluster projects in areas such as Fourways, Rivonia, Houghton and Rosebank in Johannesburg, for example, or Brooklyn and Lynnwood in Pretoria, Durban North, and many of the Southern Suburbs of Cape Town.”
Thirdly, Everitt says, the group anticipates that an increasing number of foreign buyers with cash to spend will take the opportunity now to purchase luxury SA real estate at a “discount”, in order to make the most of a market upturn after 2019, if not before.
“According to the latest Global Wealth Report from Credit Suisse, some 2,3m new dollar millionaires have been created over the past 12 months, taking the world total to 36m. And because of the weather, scenery and lifestyle on offer, SA (and especially Cape Town) is one of the top 20 destinations in the world for such individuals to buy a second home“.
“What is more, as a member of the global Leading Real Estate Companies of the World© network, we have ourselves seen international interest continuing to rise steadily in recent times, almost irrespective of the day-to-day political and economic news that consumes so much of our attention locally.”