Current Property Market Update
Category News
This is not just another article ridden with bad news.
Yes, the interest rate just increased with 50 basis points.
Yes, half of the properties for sale in South Africa are spending about 3 months on the market before being sold, and when they are sold, it is not for the full asking price...
However, there remains good news for property owners and potential owners alike.
As a real estate agency, we prefer focussing on the positives, as well as how we can respond to the current economic climate by improvising, adapting and thriving.
Louw & Coetzee Properties concluded 337 sales from March 2022 to February 2023. If anything, this is an indication that the property market remains resilient. After all, property is one of your best investment options and greatest assets. And one constant remains, people need housing.
So, what goes up must come down, right? And with the 10th consecutive rate hike there is much anticipation for what will happen in the next few months.
The Current Economic Climate
Repo rate: 8.25%
Prime Lending rate: 11.75%
Recently Stats SA published South Africa's latest inflation numbers, showing a decrease of 0.2%, which is a positive, with the current inflation rate being 6.8% in April, from 7.1% in March.
On the other hand, we know that the prime lending rate just increased by 50 basis points. And yes, the rise in interest rates, increase in unemployment, and strain on the economy weighs heavily on South Africa and its people. However, these factors lend themselves to the cause of the real estate industry being a buyers' market.
Current Property Market
A buyers' market in real estate is when there are more homes for sale than buyers are willing or able to purchase, in other words, the supply of homes is greater than the demand. During these times, it is evident that the prices of homes are often priced lower than their value, in order to compete with a saturated market. Buyers tend to have more control in the market and can negotiate for better prices and terms.
The increase in interest rates has certainly had an impact on everyone, but when it comes to property, we have made the following two observations.
Firstly, within the sale sector, we see that first-time homebuyers are thinking twice before purchasing property, especially with the 10th consecutive rate hike. However, there remains good news for buyers. Transfer duty will now only apply to properties sold for R1 100 000 or more. That is a 10% increase from last year! Furthermore, banks are offering very favourable terms and 100% bonds to assist buyers in purchasing property.
There may be a slight decline in the value of sales, but there has been no slowing down when it comes to investors investing in properties, and the number of sales are still steady. Those who are able to, are purchasing property to rent out for passive income.
With this being said, the second observation is that rental demand is at an all-time high! We see a steady increase in rental properties coming to the market. According to TPN, the Western Cape boasted the lowest vacancy rate of 2.13% at the end of 2022.
Market Related Assessments
With the current economic climate, it is important, now more than ever, to know the value of your home. A valuation on your home provides you with essential knowledge, such as highlighting the strengths and weaknesses of your property, as well as determining if now is a good time to sell, or if it would be beneficial to wait.
For more info, read our article about the benefits of a market related assessment of your property.
Investing in a New Residential Development
As you may know, Louw & Coetzee Properties specialises in New Residential Developments, and that is because there are loads of benefits for purchasers!
To find out more, read all about the advantages to investing in a new residential development.
Our team celebrated selling out at The Barracks, our first development in Cape Town City Centre!
But don't worry, we still have a few other awesome opportunities for you to invest in in 2023:
Honeydew Country Estate
Paarl
Plot & Plan Homes from R1 189 000 (VAT Incl.)
The perfect lock-up-and-go lifestyle option, now offering apartments as well, with the estate boasting amazing green open spaces, top-notch exercise facilities, wonderful play areas and 24-hour security.
Mount Vernon Residential Estate
Stellenbosch Winelands
Plots from R1 545 000 (VAT Incl.)
A new development set in the most stunning natural setting, surrounded by wine farms, exquisite mountain views, and endless vineyards.
Oribi Ridge
Northern Suburbs
Plot-and-plan homes from R2 939 599 (VAT Incl.)
Oribi Ridge is a boutique estate, featuring excellent security and the most ideal suburban location in the Northern Suburbs of Cape Town. The estate comprises of only 20 modern, double-storey homes, ensuring a close-knit community feel.
We also have a few new developments launching soon, so stay tuned!
Written by: Hayley Kellerman
Author: Louw & Coetzee Properties
