With the year’s halfway mark almost upon us, South Africa’s housing market across all segments continues to demonstrate noteworthy stamina and resilience in the face of a range of economic challenges. These include muted GDP growth, subdued business and consumer confidence in general, and ongoing energy constraints.
Stable repo rate
With rising inflation a growing concern – a factor which also serves to erode disposable incomes, this month’s decision by the Monetary Policy Committee to keep the repo rate steady was positive news, although it is likely that the increasing fuel price and proposed further hike in electricity tariffs may bring pressure to bear on the MPC’s future stance.
Residential property market resilience can be demonstrated in a number of ways – one example, as outlined in the recent Pam Golding Residential Property Index, is that of first-time buyers who continue to exhibit an increasing appetite to transact, and as a result enjoy a long-term benefit of investing in their future through homeownership.
We remain confident that in coming months we will begin to see the positive impact of the 2015 National Budget announcement that no transfer duties are payable on property transactions below R750,000 (as opposed to the former R600,000 threshold).
Support for first-time buyers
The lending climate and affordability of a deposit and bond repayments play a significant influencing role in the first-time home buyer segment of the market. Also encouraging is what is generally perceived as a more favourable lending environment, with mortgage originator ooba, reporting higher approval rates (76 percent in April 2015) and more competitive rate concessions by financial institutions. These are critical factors in supporting growth in this sector of the market.
Key drivers in current market
Despite a variety of socio-economic and political challenges, confidence in real estate as a sound investment remains a prevailing theme across all sectors of the market – with some clear trends evident. These include: a strong desire to reside in economic nodes and transport corridors which are within easy access of the workplace and schools – thereby reducing travel time and costs; a growing demand for convenient apartment living – both in terms of sales and rental accommodation; and an increasing shift towards secure estate living in integrated communities where there is a strong emphasis on sustainability and self-sufficiency. The latter undoubtedly reflects a direct response to rising energy, water and other municipal costs as well as a growing environmental awareness.
Speaking of schools, in the picturesque Underberg region in KwaZulu-Natal, a new private high school is proving an additional draw card for family buyers who want to enjoy a wholesome lifestyle in the countryside – without feeling compelled to send their children away to boarding school in order to receive a high standard of education.[clickToTweet tweet=”Confidence in real estate as a sound investment remains a prevailing theme across all sectors of the market.” quote=”Despite a variety of socio-economic and political challenges, confidence in real estate as a sound investment remains a prevailing theme across all sectors of the market – with some clear trends evident. “]
Growing demand for estate living
The numerous advantages of estate living continue to receive increasing attention from a range of home buyers seeking their ideal location in a secure environment. Steyn City – South Africa’s largest mixed-use development which offers an entirely new lifestyle concept – has taken off dramatically, attracting home seekers not only from Gauteng and around South Africa, but across the globe, and sales have already far exceeded expectations.
In successful Val de Vie Estate, in the heart of the world-famous Cape Winelands in the Franschhoek-Paarl valley, homeowners enjoy the best of both worlds, with home buyers now able to choose from a range of beautiful, modern homes in The Vines, a new phase in the development, designed exclusively by renowned architect, Stefan Antoni of Antoni Associates.
On another well-established estate, Baronetcy Estate in Cape Town’s hugely popular Northern Suburbs, the final phase of this sought after development is seeing luxurious modern masterpieces set to raise the benchmark for luxury living in this prime residential node. Much consideration is being given to green features, with one new home already off the grid and a few more being built.
In Paarl, in the Boland region of the Western Cape, the demand for luxury estate living is also clearly evident, with purchasers prepared to pay top dollar, and acquiring luxury homes in secure estates in the price range up to R10 million and beyond.
Resurgence in vacant land sales
The demand for homes is evident across all regions, with a spread of towns in the Eastern Cape and Garden Route seeing buyers acquiring vacant land in order to build their own dream homes for a range of uses, from primary residence to leisure, investment or retirement home.
In the Richards Bay area in KwaZulu-Natal, such is the anticipated demand for homes that an entire, brand new suburb called Royal Creek, comprising some 361 hectares in extent, is being developed and set to incorporate a total of 16 phases of homes, catering for a potential of 960 residences in the first phase alone.
Sea Point regains stature
In a further indication of high demand, on the Cape’s highly sought after Atlantic Seaboard, our Cape Town Metro Region reports that the current demand for beachfront, apartment living in the revitalised Sea Point area is at such an all-time high that there is an acute shortage of stock.
Rentals in huge demand
The rental market too is experiencing high demand, particularly in major centres and commercial hubs such as Gauteng and Cape Town. In Fourways and Midrandmany properties are being acquired by astute buyers as sound buy-to-let investments, both in terms of monthly rental income and future, potential capital appreciation on the value of the property.
Returning to the Mother City, the demand for rental accommodation across all areas exceeds the supply, with luxury, high-end rental accommodation often achieving monthly rentals well in excess of R60,000, R70,000 and upwards.
On the international front, the exceptional progress of the man-made Eden Island luxury resort has seen this visionary project catch the imagination of the world and rapidly become reality, to the point that it is now reaching completion with the final two basins of apartments, Maisons and villas being sold. These present the last opportunities to acquire and build your own idyllic, brand new home in this spectacular, tropical location.
This article “Stamina and Resilience Remain Cornerstones of South Africa’s Residential Property Market” was issued by Pam Golding Properties SA – http://www.pamgolding.co.za/newsletter