Navigating a Transforming Real Estate Terrain: Trials and Prospects

In 2024, the South African real estate landscape stands at a pivotal juncture, influenced by factors such as economic resurgence, electoral unpredictability, and shifting patterns in buyer behaviour. Despite a measured economic outlook, encouraging indicators are emerging for both prospective buyers and investors.

A Buyer’s Market

Over the past year, national house price inflation has declined to 3.17% (year-on-year), accompanied by a decrease in property transactions. Notably, the most dynamic segment during this period was the R250,000 to R1.5-million range, comprising nearly 67% of the market. Conversely, the R3-million and above category recorded the lowest property transfers, followed by the R1.5-million to R3-million bracket (Lightstone). I anticipate the persistence of this trend in the upcoming year, with heightened activity expected in the R500,000 to R2-million price range. Moreover, there is a foreseen uptick in the overall volume of property sales.

For prospective homebuyers, the current market conditions favour them, presenting a buyer's market. Opportunistic prospects exist for those willing to conduct thorough research or engage the services of a knowledgeable agent.

The rental market

Over the last two years, the rental market has displayed significant vitality, marking positive growth following the pandemic-induced downturn, as reported by PayProp statistics. The upswing can be attributed to a heightened demand for rental properties, partly stemming from potential buyers delaying their purchase plans amidst the elevated interest rate environment. However, there is a possibility that this trend may taper off should interest rates experience reductions in the latter part of 2024.

In 2024, we anticipate a sustained rise in rental demand, especially within the R3,000 to R12,000 price range, driven by ongoing affordability concerns. Notably, this bracket is reflected in better-paying tenant records according to rental arrears data, making it a crucial consideration for all investors.