THE YEAR THAT WAS
Category General News
What a year...but “surprisingly,” says Wakefields Real Estate CEO, Myles Wakefield, “the property market didn’t react to every speed bump”
We know that South Africans are pretty resilient, but having said that, 2016 has been a volatile roller-coaster on most fronts. Not just here at home, but internationally as well, it’s been surprise heaped upon surprise, or in some cases, shock upon shock...yet amazingly, the South African property market has flinched less than expected. Considering the political and economic noise we’ve all endured right from last December until this one, it’s an eye opener as to how relatively little the property market reacted.
Think about it. We couldn’t have dreamed up a more colourful year if we’d tried, with some inexplicable performances on our local political stage by our leading ladies and men. Internationally wasn’t much better, with shocks and surprises in the shape of Brexit and Trump. From student revolts against fees for higher education, to everything from nuclear energy intrigue and a severe drought...to overly tall trains. The world’s political theatre played to packed crowds, and even the weather was against us.
And wait, there’s more. Through all this, ran the depressed state of the economy, increased joblessness, tightening of the banks’ criteria for home loans, and the ever looming threat of a downgrade to junk status.
That’s a full house by anybody’s standards...yet, still, the property market continued on its way. No, it wasn’t booming, but South Africans still bought and sold houses, and according to bond originators OOBA, 40 percent of home loans granted in the country were to first-time buyers. That’s good news - the emerging market continued to emerge.
Little doubt that the minimal increase in the bond rate helped, so too that our municipal elections went off seamlessly proving that our political system, despite everything, works. Every South African had a voice, and, by and large, used it to express how they feel. And continues to do so. That’s healthy.
TALE OF TWO MARKETS
Property will always be about supply and demand – if the majority of the country is entry level, that’s where the demand is...and where the shortages will be. But on the flipside, that’s also where the opportunities are for savvy buy-to-let investors. Rentals have escalated this year, rental properties have been in demand...but that doesn’t mean tenants will pay unreasonable rent increases going forward – with the economy still under pressure, a very good, reliable tenant is worth his weight in gold, so weigh that up against a high increase.
Don’t confuse entry level with specific entry-level suburbs. People migrate from one suburb to another, as their life prospects rise or fall. Every suburb has an entry level, a mid and a top end. A tougher economic climate means that most suburbs will have the highest activity at the affordable level to mid price range, and less in the higher reaches.
There’s stock of top-end properties, so they sell when they’re priced appropriately, according to what the current market conditions determine. Overpriced properties are always slow sellers, and a property on the market too long comes with certain obvious negatives. If you want, or need to sell in the standard couple of months, do your pricing homework well.
TRENDS GOING INTO 2017
I believe that the increased urbanisation experienced globally will escalate, and that more and more consumers will want smaller homes in communities with shared costs and responsibilities – sectional title with levies - where work, live, play, schooling, and retail is close by. As our cities become more congested, more and more people are resisting hours spent in traffic, largely because of wasted time, costs of transport, and yes, green issues too.
Security can’t be ignored either, and communal type living implies additional security (and shared costs of it). That sense of community with shared goals – like security – has hidden value in our society, and perhaps the community that stays together plays together?
Gated estate living is here to stay for all sectors of the market, whether it’s a small urban duplex or a homestead on a golf course. Increasingly, homeowners want that sense of security for their children, want to keep their pets, and enjoy shared outdoor facilities.
In Kwazulu-Natal, there’s going to be a bigger focus on retirement opportunities in 2017 – long overdue - and Tongaat-Hulett has started the ball rolling on the north coast. Opportunities in areas such as Howick and Hillcrest are still being snapped up, and new villages are snapped up. The landscape needs more active retiree options as we live longer, remain fitter longer, and many – because of the latter two reasons – are having to make their rands stretch longer than they originally envisaged. It’s a challenge for developers, but it appears that the challenge is being met successfully.
WHAT CAN YOU DO IN 2017?
Rid yourself of debt, especially bad debt. At Wakefields, it’s our mantra. That way, if or when the bond rate rises, you’re not under pressure. Begin with your most expensive debt, and work your way through it. It’s the only way to financial peace of mind, and that way, you have financial leeway. We don’t know what 2017 will bring, but we envisage the next quarter, certainly, to be pretty much the same as this last one. Bullet proof your home financially – it’s your biggest asset, and you want to be in the driving seat here.
Best wishes to all those who celebrate Christmas, and a relaxing, rejuvenating holiday to everybody, from management and staff of Wakefields.
Author: Anne Schauffer