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“Confidence is already up in the market since the election and we’ve begun to see some normality returning. It is, however, still a tough market – and a buyers’ market – with buyers being bullish with the prices they’re offering. Those sellers who aren’t desperate to sell are holding on until the market recovers.” CHRIS TYSON, MD, TYSON PROPERTIES
In the months leading up to a general election, the property market traditionally slows down to wait-and-see election paralysis. Now that the elections are over, property experts are cautiously optimistic, although they agree that recovery will take time.
“While it’s anticipated that – in the wake of the favourable election outcome – the residential property market will rebound, in reality any significant recovery is only likely to materialise in the later stages of the year after the seasonally quiet winter months,” says Dr Andrew Golding, chief executive, Pam Golding Property group. “The post-election environment is likely to be better for the property market generally, however, a number of specific questions arise, including how the land reform issue will play out in terms of policy amendments or variations, and whether other market-friendly reforms are introduced.”
Adrian Goslett, CEO, RE/MAX of Southern Africa, is similarly cautious. “It’s possible that we’ll see increased activity within the property market as investors become more certain about our country’s economic and political future. However, this is dependent on the sorts of policy decisions that emerge from the newly elected parliament – land reform, corruption, and SOE governance being hot topics to watch.”
Economic factors
The Reserve Bank’s Monetary Policy Committee’s decision on 23 May to keep the repo rate unchanged at 6.75%, leaving the mortgage rate at 10.25%, is another factor in the equation, but Samuel Seeff , chairman, Seeff Property Group, feels this was a missed opportunity to kickstart economic growth with a rate cut. “Following the conclusion of what’s largely seen as a successful election, not much has changed. Good news and a positive injection are needed to get the economy and property market back on track.” In early June reports indicated that the economy had contracted by 3.2% in the first quarter and that the GDP growth outlook for the year has been adjusted to 1% by the Reserve Bank and Moody’s. This news makes a fast recovery less likely. “It means the property market will remain weighted by the economic conditions and sellers will have to wait a bit longer before prices will start rising again,” says Seeff.
Lower end of the market
Golding expects the lower end of the market to continue to hold up well relative to other sectors, especially the smaller sectional title properties favoured by students, first-time buyers and down-scalers. “These sectors of the market would also be those that would benefit most from a rebound or turnaround in the economy. First-time buyers are typically most sensitive to prevailing economic conditions and are a strong potential source of demand for the market. In areas where market price corrections have improved the perceived affordability of a property, it seems time on the market is declining and buyers are showing a willingness to purchase.”
Tips for buyers and sellers
The experts agree that we’re currently seeing a buyers’ market and now is the time to make the most of it. “My recommendation to buyers in the market is to act on the opportunity and buy as soon as possible before the market lifts again,” says Chris Tyson, MD, Tyson Properties.
“Provided our political situation remains stable, the gap for getting a good deal on real estate is closing,” says Goslett. “For those who are able to afford it, there truly has not been a better time to invest in property than right now. The longer buyers delay entering the market, the longer the property market has time to recover and the higher price they’re likely to pay on a property.”
For sellers who don’t have the option of waiting it out, Seeff advises, “Those who are buying, are looking for an irresistible price and sellers should be ready to capitalise on that demand. The reality of an overstocked market means that although there’s an expectation of improvement, indications are that the market will continue to trade relatively fl at for the rest of the year with price growth forecast to remain in the range to 4% at best.”
“For sellers, there has never been a more important time to partner with a well-connected and knowledgeable real-estate professional than right now,” says Goslett. “Given that most South African sellers find themselves in a buyers’ market right now, it’s imperative to partner with a professional who can negotiate with buyers on a seller’s behalf and help sellers fetch as close to full value as possible.”
“Buyers are advised to pay attention to value in relation to what’s on the market. Buy the home that offers the best in relation to location and requires the least building interventions. Sellers are advised to ensure their home stands out when competing with the homes for sale in close proximity.” DR ANDREW GOLDING, CHIEF EXECUTIVE, PAM GOLDING PROPERTY GROUP
