PROPERTY: Here is What Seeff Predicts for the Gauteng Property Market in 2018
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ACCORDING to Jacques du Toit, Property Analyst at Absa Home Loans, it is not just doom and gloom that is awaiting South Africa’s property market in 2018.
Du Toit, who recently shared this forecast at a Seeff regional meeting in Pretoria, said that stable interest rates, inflation to remain under control, steadily rising house price growth, a gradual improvement in consumer finances with debt ratios edging lower and higher growth in disposable income, are all part of his predictions for the coming year.
“While the economy is out of recession and slightly higher growth is expected in 2018, the property market will continue to be affected by consumer finances, confidence levels and economic trends that are likely to be driven by political developments in the coming year”.
Du Toit concluded that housing affordability is to remain a key property market factor, supported by inflation to remain within the 3% - 6% target range and some improvement in consumer finances.
Seeff asked some of its principals in Gauteng to share their predictions and advice for the coming year:
Steve van Wyk, Seeff’s MD in Centurion, predicts that the property market will either continue to stagnate or do extremely well, depending heavily on who is elected as head of the ANC in December.
“If Cyril Ramaphosa is elected for instance, the market could perform very well because this will have a major impact on market sentiment and business in general.
In return this will lead to more investment by private companies and the economy will benefit and should grow,” concludes van Wyk.
Charles Vining, Seeff’s MD in Sandton, agrees that the political situation will have a major impact.
“Much buyer hesitation has been based on the volatile political situation, and we expect that after the ANC presidential elections in December there will be a renewed confidence in South Africa’s economic forecast.
Property is a medium term to long term investment and so the economic and political landscape has a direct impact on buyers and sellers decisions”.
Vining concludes that the real estate market is cyclical, with peaks and troughs.
“We currently find ourselves in quite a flat market, but we expect the market to bounce back steadily in 2018. It may be an incremental increase in buyer confidence, but we predict that it will improve with each passing month.
Chris Hajec, Seeff’s MD in Randburg, says he cautiously predicts a much improved year for the Randburg property market compared to 2017.
“Barring any further political upheavals or environmental issues sufficient to have an impact on the economy, increasing consumer confidence and small victories in the economy are slowly starting to entice skittish buyers and sellers out of the economic hibernation they have been in since the end of March and the downgrade.
The upper end of the Randburg market, which consists of properties priced above R2 million, is what is ailing the most currently and what we should see rebounding with the most significant margins.
The higher up the socio-economic ladder you are in South African society, the more likely it is that you have been exercising economically conservative spending in the last nine months.
The “National Resilience Gene” is about to work its magic as South Africans shake themselves off and realise, as they always do after events like the downgrade and other recent political tensionsâ, that life goes on and there is a lot of opportunity waiting to be taken advantage of.
And of course, no opportunity when evaluated over time eclipses the benefits to be found in owning property”.
Gerhard van der Linde, Seeff’s MD in Pretoria East, says it will be become increasingly important for sellers to understand the absorption rate in their area if they want to make an informed decision before putting their property on the market in the coming year.
“Absorption rate can be explained as the total number of property sales in a defined market segment as well as the rate at which those homes will be selling within a certain period of time. This calculation will give an indication of how long listings will stay on the market before they are sold”.
Van der Linde continues that a property will take longer to sell when there are more properties competing with it.
It is therefore critically important not to place a property on the market at an unrealistic value. It has been proven that the longer it stays on the market, the less attractive it becomes to buyers and could eventually result in a lower selling price”.
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