GAUTENG BUYERS DOMINATE WEAK HOUSING MARKET

The residents of Gauteng, a province in South Africa, are showing resilience in the face of tough economic conditions by actively pursuing homeownership. They accounted for over 50% of the total number of home loans granted in the past year. From July 2022 to June 2023, both repeat and first-time buyers from Gauteng dominated home loan financing with BetterBond, a bond originator.

While this is a positive trend in the property market, overall property sales are experiencing a decline due to the current interest rate cycle. Data from Lightstone Property and RE/MAX National Housing Reports indicates a significant decrease in bond registrations and transfers compared to the previous year. However, national house price inflation has increased slightly to 3.77% since April 2023, according to Lightstone.

The average prices of sectional title properties and freehold homes in South Africa have seen year-on-year increases of 7% and 3%, respectively, according to RE/MAX data. Despite the decline in the number of transfers, the average selling price for RE/MAX network in Q2’23 was up by 2.9% compared to the same period last year. However, the average active RE/MAX listing price for Q2’23 experienced a 4% decrease year-on-year.

The Western Cape remains the most searched province on remax.co.za, with suburbs like Parklands, Bloubergstrand, Sunningdale, Table View, and Claremont being highly sought-after. RE/MAX’s registered sales value in the Western Cape has exceeded Gauteng for the first time, driven by higher average selling prices in the region.

BetterBond’s July Property Brief reveals that Greater Pretoria, Johannesburg North West, and Johannesburg South East regions accounted for 53% of all successful home loan applications. The Western Cape and KwaZulu-Natal recorded the next highest levels of activity.

The property market is facing challenges due to rising interest rates and inflation, leading to a decrease in home loan applications during the current Reserve Bank hiking cycle. Buyers are primarily investing in lower-priced properties, with a notable drop in purchases above R3 million.

Seeff Property Group chairman Samuel Seeff suggests that the market is becoming challenging for sellers and first-time buyers. It is currently a buyer’s market, and sellers need to set realistic asking prices to secure timely sales. However, for buyers, this could be a favorable time to enter the market, similar to the periods before the 1994 elections and the 2008 Global Financial Crisis.

“Those who had bought in 1993 or 2006/7 with the perceived risk at the time, subsequently benefited greatly from good capital growth which followed.”

Seeff adds too that the interest rate will come down again. Prices are flat and the banks are still lending, albeit that buyers will have to budget for the higher rate right now. Staking your claim in the property market right now could very well stand you in good stead.