As we enter 2020, and following a decade of ups and downs in the real estate sector, top estate agents predict that the residential property market will remain challenging.
The housing market, which along with other factors like GDP, employment, manufacturing, and cost-of-goods, is considered one of the most valued indicators of the health of an economy, which remains muted and not helped by the late 2019 rolling power blackouts and threats of Stage 6 load-shedding, the business rescue of the national airline, and similar discouraging news that adds to the already poor investment sentiment.
Whatever is thrown at it, the country's residential market endures, and the estate market players must be heralded for their enduring resilience. It is to them that property buyers and sellers turn for expert advice and guidance, and it is to them that we turned for their predications on what the market will be doing in the year ahead.
Herscel Jawitz, CEO Jawitz Properties
The residential market is going to move sideways in 2020 with real prices declining driven by a surplus of stock on the market and continued buyer caution. Similar conditions will prevail in the rental market for lessors who will need to have a healthy dose of market realism. For sellers and lessors, the competition will not be for buyers but rather between those sellers and lessors who are more realistic about what the market is prepared to pay for their home. For buyers and lessees, the 2020 market will once again offer the best buying and renting opportunities in some time with banks willing to lend. For buyers who are prepared to get off the fence and commit, this is their market.
Adrian Goslett, regional director and CEO RE/MAX of Southern Africa
I predict that, provided no further threats to our economic growth occur during the year ahead, the local property market will remain more or less stable in 2020, reflecting marginally higher rates of house price growth and higher numbers of transactions. I believe the luxury market will continue to feel the pinch within this tight economy and the majority of transactions will continue to fall within the affordable price ranges.
Tony Clarke, Managing Director, Rawson Property Group
The South African property market continues to show slow but steady growth in what will become an extended period of low demand and minimal market activity. The market will take time to recover fully from this contraction, and buyers are still in a position of strength with supply outweighing demand for now.
For 2020, we hope to see an improved economic growth rate that will contribute to an increased income, improve affordability and boost consumer confidence, which is then hoped to drive an increase in property demand among the lower and mid property price ranges. The trigger of price growth will help stimulate healthy competition for property.
We anticipate that lowered interest rates are predicted for mid 2020. This would mean that consumers could end up spending less servicing debt, and it will help increase their disposable income. This, combined with more affordable and easier access to home loans, will make property an increasingly attractive option in the future, stimulating demand and driving healthy house price growth. The trend towards smaller, more affordable and more manageable homes will continue to grow while luxury homes will continue to feel the pinch.
For 2020 and beyond, those real estate brands who have invested in the right technology, will see their market-share grow. The rise of tech-enabled estate agents with access to tools and systems allowing him/her to combine the best of both digital and agent based real estate services into the ultimate property experience, will come out on top.
Samuel Seeff, chairman, Seeff Property Group
The upside to the market, is that 2020 kicks off as one of the best times to buy. Sellers will now be ready to sell, and buyers can negotiate strongly. Although Seeff expects transaction volumes to increase, it will be largely below R1.8-million (R3-million in some areas), supported by the low borrowing costs and favourable mortgage lending conditions. Prices will remain flat and sellers will need to price conservatively or risk not attracting buyer interest.
Andrew Golding, Chief Executive, the Pam Golding Property Group Following another year of tepid economic growth, load shedding further dampening the economy, an anticipated Moody's downgrade early in the year, and with household finances under pressure for the foreseeable future.
In 2020 the focus in South Africa's housing market is likely to remain on affordability, value-for-money and cost saving - for example transport and utilities - for the bulk of the market.
Myles Wakefield, CEO, Wakefields Real Estate
In 2019, property price growth was in the three percent range, with high points being the lower end of the market, the banks' willingness to lend money, and a low interest rate environment (hopefully with some scope to cut the rate further). We expect this trend to continue through 2020, with an improvement in sentiment required to increase that prediction.
Berry Everitt, Group CEO, Chas Everitt International Property Group We expect downward pressure on home prices to be maintained in 2020, largely due to negative consumer sentiment around load-shedding, land expropriation without compensation, and SA's probable credit downgrade by Moody's rating agency. To some extent this will be buffered by the banks continuing to lend readily into the real estate market.
However, we do not anticipate that the Reserve Bank will lower interest rates, as it needs to retain the favour of international investors. As a result, home sellers will need expert and honest help to set accurate asking prices or risk long and costly listing times, and there will be some excellent opportunities for buyers with cash.
Carl Coetzee, CEO, BetterBond
Buyer demand continues to rise in SA, as illustrated by a 9,7% increase in the number of home loan applications received in the 12 months to end-November, with more than half being submitted by first-time buyers. At the same time, keen competition among the banks for new home loan business led to a 21,4% year-on-year increase in the number of new bonds being granted, and a 5,1% increase in the total value of SA's outstanding home mortgages, according to the Reserve Bank. Almost 59% of bonds currently being granted are for less than R1-million, although only 39% are going to first-time buyers, so there is clearly a strong element of downsizing/ downscaling among repeat buyers also in play in the market. We do not expect these patterns to change much for at least the first half of 2020.
Gerhard Kotze MD, RealNet
The next decade is expected to bring about more change and disruption in all aspects of life, including real estate, than the world has experienced to date - and the big shift likely to dominate the property market in SA during 2020 is the proposed change to the Constitution to facilitate the expropriation of land without compensation.
Fears about how this will be implemented have put a damper on the property market for the past two years, but the message RealNet will be taking to the market in 2020 is the huge benefits the country could derive from acting timeously to provide security of tenure for the millions of South Africans who currently still live precariously in townships, informal settlements and on tribal land and farms - and in the process actually increasing private property ownership and the opportunities it offers for personal wealth creation.
Richard Gray, CEO, Harcourts South Africa
After a rather tumultuous 2019 I believe that 2020 will see some stability returning to the property market. It is likely to remain a buyer's market, as property price correction takes place in several areas. However, I expect that the gap between what sellers believe that they can achieve for their properties, and what buyers are prepared to pay, will continue to narrow. There is still plenty of demand for realistically priced property.
Lew Geffin, Chairman of Lew Geffin|Sotheby's International Realty
The only light at the end of the tunnel is a train coming in the opposite direction. The property market is in dire straits due to the failing economy and lack of confidence in the leadership of this county and now we have rolling blackouts to add some hot chili. The market is down at least 30 per cent from 2016 and volumes are down as much as 50 per cent or more.
There is a light, however, as it is an ideal time to get into the market as never before and a great time to upgrade because if you sell low you buy low and the proportional difference in the swop will be greater when the upturn finally comes and it will but we are basically near rock bottom at the moment.
Article published courtesy BIZCommunity