2016: What’s in store for the property market?
Home owners are in for a very tough time due to the current economic climate.
According to Bruce Swain, MD of Leapfrog Property Group, at the threshold of 2016 South Africa is still dealing with the effects of the shock firing of Finance Minister Nhlanhla Nene, SARB raising the interest rates (albeit very slowly) and the drought which has started putting pressure on food prices.
“Therefore, financial experts are advising the public to tighten their belts in preparation for a trying year ahead,” said Swain.
“As these issues affect the national economy, food and fuel prices and the CPI inflation it naturally also filters through to the residential property market,” said Swain.
“Added to this, experts expect the prime lending rate (currently at 9.75 per cent) to increase at the first meeting of the SARB’s Monetary Policy Committee meeting at the end of January.
“Any increase will have a negative impact, particularly on those homeowners with 80%+ bonds.
“Then there is also the expectation of a jump in food prices on the back of the drought and of course increases in the cost of electricity and water – all of which raises costs for home owners.”
Despite this, Swain also said there seems to have been a softening in the rental market over the past 12 months, especially in the R5 000 to R10 000 range.
“The increased economic pressures might lead one to believe that the rental market will experience more demand in 2016, but this is not the case.
“This is due to a large number of new developments in the R400 000 to R950 000 price ranges coming onto the market, which people would rather purchase than rent.
“He does however go on to state that rental accommodation in close proximity to established urban infrastructure, transport, schools, universities etc will remain in high demand.
Regarding property in demand, Swain said the high crime statistics in SA ensures the continued demand for secure living, which gated communities and many sectional title developments offer.
“I also see a move back to bigger, older homes which will offer families the cost benefits of multi-generational living”, explained Swain.
His advice to buyers is to understand what they’re looking for in a property, do the research about the area and the property itself and to get pre-approval for a home loan – all of which places a buyer in a better negotiating position.
“It’s also really important for buyers to familiarise themselves with all of the costs involved in the property purchase (from the asking price and transfer duty to the levies, if applicable) and to ensure that they stick to their budget.”
When it comes to selling Swain recommended dealing with a reputable agent when setting the asking price (so as to ensure that the property is accurately valued) and to be aware of competing property prices on the market.
“Well presented homes generally achieve higher selling prices, so spending some time and money on de-cluttering and freshening up the property is advised”.
