The 2019 PROPERTY MARKET - WHAT WE THINK
Category Residential Property News
Wakefields CEO Myles Wakefield looks back at a few of the 2018 property predictions, and off the back of that, predicts the state of the 2019 property market.
"Predicting the future is never an exact science, but we can look back, assess the accuracy or not of last year's predictions, and use those to look into the future.
"I think we all overestimated the Ramaphosa effect, believing that change would take place much faster, and that key things would right themselves quicker. But slower, of course, doesn't equate to negative, and there have been numerous positives which we shouldn't underestimate. There's a great deal happening, much of it precisely what we wanted...only slower than we'd like.
"What we did get right, was that 2018 would be a far better year in property than 2017...and without fail, every single month of this year, Wakefields figures were noticeable higher than the corresponding month of the previous year.
Confidence is everything
The impact of the lack of clarity on the "Land Expropriation without Compensation" issue has been marked, and it's had a resounding knock-on effect on the economy and the property market. Confidence was significantly dented by this at a time when, certainly locally, confidence was on the up.
We correctly predicted that volumes of sales would go up in 2018, and they certainly did. But we didn't anticipate the number of properties which would come on to the market. The volumes rose, but because of that steady supply of properties coming on to the market, there's been little price escalation.
As long as there are no unexpected surprises, the first quarter of 2019 seems likely to tick over pretty much as it is now. The May election will be the turning point. From now until then, we all know the economy is tight, and the best we can all do, is to keep our belts on the same notch...or tighter. Focus on reducing 'expensive' debt, and ensure that the most important repayments like our home loans are honoured.
A home loan rate increase, albeit very small and on the back of our low interest rate, wasn't the holiday gift we'd wanted...but the promise of lower fuel prices brings some holiday cheer.
We believe that in May, our president will be given the mandate to forge ahead with increased vigour and speed. Not miracle work, but slow and steady. He'll be able to do what we believe is his forte, and that is to accelerate economic growth.
And that will re-energise the property market.
What's required for the economy to pick up?
In a nutshell, five major things:
- Structural change to our economy, where it is easier to do business and red tape is reduced. Create a space where investors can operate with ease, speed and confidence.
- Fix or resolve the State-owned Enterprises.
- Find solutions to ease the public sector burden on our economy
- Continue to root out and stop the corruption.
- End policy uncertainty around land expropriation.
Can we take away any positives from 2018?
Yes, we can.
First-time buyers are on the rise. It's vital that South Africans across the board enter the property market, and they're doing so. Property prices have been under slight pressure, which has also opened the door a little wider for negotiation between buyers and sellers...and that has worked well for the first-time buyer market.
Statistics are very clear that more home loans are being granted to first time homeowners (ooba's figures show at least 50 percent of loans go to this sector), and sales percentages to this sector are noticeably up. This indicates the change we need in the market place.
That pressure on prices, hasn't gone unnoticed by investors. There's been a gentle uptick in interest from this market sector.
The global trend towards densification continues unabated in South Africa, and developers are responding to this demand. Smaller homes and shared facilities means lowered, often shared expenses. In addition, South Africans are wanting to live close to work, schools and amenities, and are resisting long, time-wasting, stressful commutes in dense traffic. Leisure and family time is recognised as invaluable.
A last word
Sentiment is the major brake on the property market - and the country's economic momentum - and although there's much beyond our control, there's much within it. We all have roles to play to build our communities and our country. There are numerous positives happening, slowly and surely, and I believe that in the second quarter of 2019, sentiment will improve, and the market will follow.
Author: Anne Schauffer