The outlook for South Africa’s housing market is looking increasingly optimistic with a number of positive indicators evident and early signs of sustainable growth in house prices and market activity already starting to emerge, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
Says Dr Golding: “Repeated petrol price cuts, a seemingly imminent interest rate cut, improved confidence and the continued absence of loadshedding augur well for a continued, steady recovery in the housing market. We have seen both sellers and buyers, including investors, who had previously been sitting on the fence in the lead-up to the election, move forward and commit to property transactions, demonstrating that as long as there is stability, sentiment – which is a key driver of the residential property market – tends to improve.
“Encouragingly, headline consumer inflation decelerated to 4.6% in July from 5.1% in June, much lower than forecast. Overall price pressures have been easing for some time now, reinforcing expectations that the Reserve Bank will cut interest rates by at least 50bps and possibly even 75bps before year-end, with the first cut anticipated in September (2024).”
According to the Pam Golding Residential Property Index, national house price inflation continues to rebound, rising to +4.7% in July (2024) – a level last seen in February 2022, having risen steadily from a low of +2.4% in Q3 2023.
The Index reports that, contributing to the national recovery, house price inflation (HPI) in the two lower price bands below R1 million and R2 million, continued to accelerate in July 2024, rising to +8.7% and +3.4% respectively. Interestingly, while sectional title HPI is experiencing a robust recovery, rising to +3.6% in July, a data revision reveals that freehold HPI also strengthened last month, with growth of +4.1% marginally outstripping sectional title house price inflation.
Says Dr Golding: “While the Western Cape remains the standout performer, we have also already seen increasing activity and interest this year and during recent months in various other key metropolitan hubs and sought-after nodes around the country across all sectors, including but not limited to the high-end of the residential market.
“All major metro markets are showing signs of recovery, with Cape Town enjoying the strongest growth during the year to date (+2.9%), while national housing market activity has normalised and shown tentative signs of recovery in Q2 2024 as purchasers continue to buy and sell for all the usual reasons.
“Another positive is the strong growth in investment demand since the pandemic, but particularly over the past 18 months, to levels last seen in 2009. Demand for investment/buy-to-rent properties – which peaked at 12.9% of all ooba mortgage applications in February 2024, stood at 12% of all ooba applications last month (July 2024).
“At a regional level, the recovery is being partly driven by a turnaround in the Gauteng and KwaZulu-Natal regional markets. In terms of house price inflation, the average purchase price in both Johannesburg and Tshwane has strengthened in recent months, suggesting that a return to positive territory – compared to year-earlier levels – is likely later this year. There does appear to be a positive turn in the Johannesburg residential property market generally, with increased buyer enquiries, and increased attendance at our exclusive previews and on show days. This includes increased interest at the top end of the market.