Growth in property prices slows
Property price growth in the Western Cape has fallen below 10% for the first time in at least three years
There has been a gradual slowdown in growth in property prices across SA including in the Western Cape, where property price growth has fallen below 10% for the first time in at least three years.
Herschel Jawitz, the head of Jawitz Properties, said that in most regions in SA, residential supply exceeded demand. This meant cautious buyers who were seeking value were spoilt for choice. Meanwhile, uncertainties in SA had made people hesitant to sell their properties.
"In Johannesburg, we are seeing zero nominal price growth in certain circumstances — not area-specific — where sellers are not getting their purchase price in nominal terms, when they have bought one to two years ago," Jawitz said.
He said value, as a combination of position, price and size, was the key driver in the market at all price levels.
Jawitz said that because buyers were spoilt for choice, they were reluctant to get involved in significant improvements to a property, believing they could pay the same value-driven price for a home that was ready to move into.
Buyers were downsizing from large homes that were expensive to maintain and run, and also because of security. But despite a challenging economy, first-time home buyers continued to show strong interest in the market, Andrew Golding, the head of Pam Golding Properties (PGP), said.
Styles of living and housing were changing in SA. "We also anticipate a continued demand for secure estate living, both freehold and sectional title, as well as homes catering for the ever-growing retirement market — those wishing to retain an active lifestyle and enjoy a range of amenities on site."
While looking forward to a busier summer period ... the biggest challenge for the economy and market remains the unstable political climate and poor economic decision makingSeeff
Jawitz said it was a buyers market in various ways. "Despite a difficult economy, competition among the banks for a smaller pool of buyers and bondable transactions means that buyers are benefiting with more competitive rate concessions from the banks."
PGP said the residential market had been resilient even if growth had tapered off. "When we review the latest Pam Golding Residential Property index, we note that national house price inflation has averaged at 4.14% during the year to date [January to October], losing some momentum in recent months with an increase of 3.9% in the third quarter," said Sandra Gordon, PGP senior research and market analyst. Gordon said average house price growth for 2017 was likely to be lower
than the average consumer inflation rate.
"As an immovable asset, housing markets are hyper-local and house price growth is determined to a large extent by the level of economic activity in the area, as well as migration trends, local housing availability and lifestyle trends," Gordon said.
Seeff Property Group chairman Samuel Seeff said the residential property market would be tested in the first half of 2018. "While looking forward to a busier summer period, especially the first part of the year when there is always higher activity, the biggest challenge for the economy and market remains the unstable political climate and poor economic decision making," said Seeff.
The midmarket below R2m had been most active for the Seeff group in 2017, but it was very susceptible to financial strain, Seeff said.
"The upper end, despite being able to better absorb economic fluctuations, has seen a notable slowdown in the Gauteng market above R5m and in the Cape above R8m and above R18m on the Atlantic Seaboard.
"The holiday and investment market has also slowed."