South Africa, as a nation, is known for its “glass half full” outlook, but it would take a special kind of person to look back on the past year’s property market with any enthusiasm.
Asked what he viewed as 2019’s property market highlights, Knight Frank SA chief executive Richard Hardie’s summed up the general sentiment with his response: “I’m not sure there were any, to be perfectly honest.”
Simply put, 2019 has been dismal for property with the harsh economic climate spewing out low – and declining – house-price growth, rising levels of emigration, and local markets that, if not completely stagnant, are barely ticking over.
The real lowlights, says regional director and chief executive of Re/Max of Southern Africa, Adrian Goslett, have been the ongoing fiscal concerns around Eskom and SAA that have “put the country’s economy on shaky ground”. “Moody’s downgrade of our investment status from ‘stable’ to ‘negative’ was a further knock to investor confidence within the local market.”
In the Western Cape, last year’s drought negatively affected the market, while crime remains a concern, says Mike Greeff, chief executive of Greeff Christie’s International Real Estate. “The Eskom load-shedding issue has also been a lowlight and continues to pose a problem.”
Rising levels of emigration have been the biggest negative for Hardie. “It reached the highest figures in 10 years.” However, he thinks this will lessen next year. But there is still optimism out there.
“With the slower market we have seen an opportunity for buyers to get into the market at good prices that were previously not available,” says Rob Stefanutto, director and head of developments at Dogon Group Property. “And while the market remained slow, we have seen a trend towards smaller units coming on stream.”
Goslett says the interest rate cut in July was “a big highlight”, holding the potential to increase market activity and drive up prices. “The Rugby World Cup win was another highlight for the nation as a whole. A victory such as this can work towards restoring confidence in the local market and attracting the attention of foreign investors.”
Some unexpected positivity came with the banks’ lending of up to 105% and aggression in competing for business, says Greeff, noting that it was a “bullish move” based on a feeling that the market had bottomed out.
“The drop in the repo rate was another peak in 2019, since this made repayments slightly more affordable.” Further, market sentiment improved post-election and there has been “a palpable increase in buyer interest” since the World Cup win.
“It’s often something positive that provides the tipping point to decide to buy property. People really do want to believe in a future in South Africa, and particularly in the Western Cape.”
Last week’s Reserve Bank decision to leave interest rates unchanged offered some relief for consumers ahead of the festive season, says Craig Mott, Western Cape regional sales manager for the Rawson Property Group.
“A prime lending rate of 10% is still favourable for buyers, particularly when paired with the generous bond rates on offer from eager lenders.” There were also “a few pleasant surprises” for Yael Geffen, chief executive of Lew Geffen Sotheby’s International Realty.
“The main one was the release of statistics which showed that for the first time, single women are the biggest group of property buyers in South Africa. This is a giant leap for womankind.”