What's in store for 2024?

While it's impossible to gaze into a crystal ball and foretell the property industry's future, a few key trends will likely influence the market next year. Among them are sustainability, services and municipal infrastructure on the part of buyers, and agility and adaptability for agencies and developers. We look at what a few key role players have to say.

Senior Manager of Strategy and Analytics at Nedbank Home Loans, Yedhvir Ramdhani, shares, "We see the SARB decreasing interest rates by 100 basis points (bps) throughout 2024, split into four 25-bps cuts, with the first of these expected at the March MPC meeting. At the end of 2024, the repo rate should stand at 7.25% and the prime lending rate at 10.75%".

Gerhard Kotzé, CEO of the RealNet Property Group, believes that from an investor's point of view, "We are now at or very close to the bottom of the market cycle and that the first half of 2024 will be one of the best times to buy real estate that we've seen in the past decade."

These optimistic sentiments are shared by Harcourts CEO Richard Gray, who expects the residential property market to recover to a degree in 2024. "Potential decreases in the interest rate in 2024 and the continued desire for South Africans to buy their own homes will see activity increase from early next year," he says, "Even though the South African consumer has been battered this year, the market remains resilient, and any form of good news will provide the catalyst for the relative inertia we are currently experiencing."

Resilience is undoubtedly something the country is quite familiar with; 'a strong South African trait', as Samuel Seeff, chairman of the Seeff Property Group, describes it. "While the higher interest rate and a weak economy are weighing on the property market in both volume and values trading, it remains underpinned by a sense of resilience with many areas still seeing good demand."

With future buoyancy expected, a few trends are here to stay. With this in mind, the residential property market must remain agile and flexible, much like during the pandemic, advises Dr Andrew Golding, CE of Pam Golding Property Group. "For example, new residential developments which offer units for purchase as well as short- and long-term rentals (with apart-hotel facilities), and mixed-use that allows for commercial and residential in a single new development."

Trends that are here to stay

Rentals

Elevated interest rates have caused many South Africans to abandon the idea of buying and instead rent for the foreseeable future. PayProp's Q3 2023 report shows quarterly rental growth of 4.6%, a level last seen in 2017, and landlords are cashing in. "Rental arrears are also at much lower levels nationally than the previous quarter, which gives landlords increased security and may result in a tidal wave of new property investors in 2024," explains Grant Smee, managing director of Only Realty Property Group.

Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, also predicts that people will become more likely to extend rental agreements rather than enter the housing market and might even turn to renting as an alternative to homeownership. "Higher demand for rentals will push rental prices up or, at the minimum, keep rental prices high".

Going off-grid

Even if loadshedding eases, the cost of electricity and any possible further outages will drive the move to solar and alternative energy sources for more self-sufficient homes. This bodes well for the industry as a whole, says Kotzé. "For one thing, many homeowners have installed solar or hybrid systems and continue taking the strain off the national grid. This means we can look forward to less load shedding, more jobs and, ultimately, more home buyers."

Semigration 

Driven by lifestyle and governance factors, semigration will continue. Rawson Property Group MD Tony Clarke believes that as socio-economic issues continue to plague the country, vast numbers of citizens will continue to join the semigration trend. "Either unwilling or unable to depart the country entirely, these semigrants will tend to lean more towards the country's best-run municipalities, for example, small-town coastal areas such as the Eastern Cape, Ballito on KZN's North Coast, and St Helena Bay, Vredenburg and Stilbaai in the Western Cape." 

Seeff believes the industry's resilience is reflected in this trend, which will continue to thrive in the Cape and coastal markets and include security enclaves and estates as people seek better services, safety and lifestyle offerings.

"We will likely continue seeing these strong pockets of excellence where property values will grow. In the Cape, for example, where, despite a challenging year, there has still been strong investment by local and international buyers into high-end property with more sales above R10 million compared to Joburb/Sandton, and still the highest prices paid of upwards of R50 million to R150 million," he explains. 

"In 2024, buyers will continue to prioritise lifestyle perks like beautiful views and quieter neighbourhoods over convenience and proximity to economic hubs as was previously the case. Affordability also plays a role here, as many small towns offer bargain prices for large, freestanding homes," says Smee.

Convenience and low maintenance

Given security issues, the shift to low-maintenance, convenient sectional-title properties will continue to grow, particularly in commercial hubs and metropolitan areas. "Developers are responding to the demand for sectional-title living, with new flats and townhouses increasing," says Golding. Clarke anticipates buyer preferences will trend towards smaller, more affordable properties, with holiday home purchases slowing down.

"Despite the predominance of freehold stock on the South Africa property market, sectional-title properties have become the leading choice for first-time buyers in particular. This is due to age demographics, urbanisation, affordability, availability, and lifestyle trends. We're definitely seeing an increase in trends like micro-apartments with shared co-working and co-living spaces. This gives buyers access to community and social interaction with the added benefit of certain shared expenses that would otherwise cost a relative premium." 

"For those facing tough financial challenges, every crisis presents itself with opportunity," says Clarke. "That could mean selling now to reduce debt and improve your financial liquidity or buying while prices are low to benefit from future growth. Affordability is going to be critical in 2024 and beyond. People might even choose to renovate rather than upgrade to a new home. The most important thing is not to make impulsive moves out of panic.

"Property remains an excellent and stable investment, outperforming many other asset classes. It's exciting to see South Africans recognising this opportunity and continue putting themselves out there on the market," he concludes.