The property market has shifted notably over the last 18 months as the fall-out from the weak political and economic climate, poor growth and credit downgrades continue.
Where it was a sellers’ market until early last year, there has been a progressive shift this year which has manifested in lower demand, rising stock levels combined with a decline in buyer confidence, flat price growth and deals taking longer to conclude.
The outcome is that we head into 2018 with a buyer’s market for most areas.
It is concerning to most agents that there is still a lag on the sellers’ side of the equation, with price expectations out of step with the market. The result, is an overall weaker market with low levels of liquidity that now favours buyers in most areas.
Overall, the market is down by about 15%-20% from the 2015-highs. Yet, we operated in 2017 with slightly improved fundamentals compared to 2016, being a lower repo rate (6.75% vs 7% in 2016) and slower inflation (5.3% vs 6.5% in 2016),
According to property experts, the reported slow-down in ‘semigration’ is also attributable to the slow rate of sales in other provinces combined with the high prices in the Cape – which has now also put a dampener on this market.
The holiday and investment market has also slowed as an inevitable fall-out from the weak confidence levels.
Finance minister Malusi Gigaba painted a subdued outlook in his mini budget, and that the country is in for a tough economy and property market in 2018. While by no means gloom and doom, it is a period of prudence ahead for property, he said.
While looking forward to a busier summer period, especially the first part of the year when there is always higher activity, the biggest challenge for the economy and market remains the unstable political climate and poor economic decisions making.
That said, history has shown SA property to be a good investment with growth rates that generally outpace inflation during a positive economic phase as we have seen over the last few years - property remains a good investment, especially if it is your primary home.
Regardless of the state of the economy, there will always be people who need to buy or sell for a variety of reasons and there is opportunity in every market. Every economy and property market goes through cycles and it is always best to take a long-term view.
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