MAIN IMAGE: Samuel Seeff, chairman of Seeff Property group, Dr Andrew Golding, chief executive of Pam Golding Property group and Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa
Property experts welcomed the recent announcement that the interest rate will remain unchanged – here’s why this and other factors are improving the outlook for 2019.
The announcement by the Reserve Bank’s Monetary Policy Committee (MPC) means the prime lending rate remains at 10.25% and the repo rate at 6.75%.
“We need stability so that we can get on with rebuilding confidence and the economy,” says Samuel Seeff, chairman of the Seeff Property Group.
Apart from the repo rate holding steady, providing encouragement for home buyers with mortgages, Dr Andrew Golding, chief executive of Pam Golding Property group, is positive due to a number of positive developments that the country’s economy, though still expected to remain below 2%, will deliver a stronger performance than the previous year’s dismal 0.7%.
These positives include the prospect of a third cut to the petrol price in early February (following a cumulative R3 cut in December and January) and the stronger performance by the Rand which all combine to lessen the pressure on the Reserve Bank to raise interest rates. Nonetheless, some financial analysts predict further rates increases could still happen towards end of the year or even early in 2020.
Therefore, Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, advice South Africans to celebrate this ‘small victory’ by doing what they can to pay off their pre-existing debts as aggressively as possible while the interest rates remain stable.
Property areas to watch
Golding says they are seeing more buyers in the market place than a couple of months ago – most notably in high-demand zones which include Hyde Park, Pretoria and burgeoning KwaZulu-Natal North Coast.
“These are areas which have seen significantly improved activity in December 2018 compared with the same period in 2017, with uMhlanga even turning in record sales turnover during this period. In addition, our Pretoria region reports that development sales in mixed-use developments have also surprised on the upside over the past three to six months,” he continues.
Dr Golding says KZN is priced well and well positioned from a commuting perspective and therefore still experiencing semigration, Gauteng is showing good activity largely because it remains the financial hub of the country and attracts the upwardly-mobile, career-minded home buyer, while Pretoria and surrounds are active as people invest in precincts such as Menlyn Maine, which offers attractive and convenient, lifestyle living.
Samuels said well-priced residential properties in the R1m-R1.5m to around R3m price band can still sell within a reasonable timeframe. In the higher price categories sellers will need to make their price attractive to catch the attention of buyers who have a lot more to choose from.
Wait and see for 2019/20 budget and elections in May
Golding says many investors and property buyers are adopting a wait and see approach in the lead-up to the 2019/20 Budget and the general election (expected in May 2019). He says not the results of both these events could influence local business and consumer confidence, as well as the likelihood of South Africa keeping or losing its investment grade rating from Moody’s.
“Should the economic recovery and/or political environment lean towards the upside, South Africa may well retain its investment grade rating and the outlook for the local housing market will improve. However, any disappointments on these fronts could see Moody’s downgrade South Africa – which would weigh on confidence, batter the Rand and increase the risks of a deterioration in the economic outlook and hence the local housing market,” he explains.
Investors should benefit from buyer’s market while it lasts
Property experts advise property investors to make the best use of the opportunities available in the current slow market conditions. Popular areas to keep in mind includes the V & A Waterfront in Cape Town as well as the upmarket Western Seaboard where Golding says sales activity has slowed somewhat in recent years by prices continue to rise.
Goslett also reminds South Africans that now is the perfect time for investors to enter the market. “Owing to the upcoming election period, the property market in general is likely to be off to a slower start in the first half of the year. If things continue to go favourably for our country, the property market might well shift into a seller’s market towards the end of the year, lessening the opportunities for buyers to pick up a good deal,” Goslett concludes.
“We believe that 2019 holds much promise, as elections and a positive result will drive sentiment and improve the economic outlook. Foreign investment is on standby and all things being equal we will see an increase in activity, given that we are a favoured world emerging market. If this occurs, the local property market will start to see significant improvements in activity,” ends Golding.