Senior writer
According to Mordor Intelligence, residential real estate globally is estimated to be US$11,82 trillion and expected to reach US$15,87 trillion by 2030. Naturally, growth is always expected as the world becomes more populated, but now, with an overpopulation density of 50 people per square kilometre, the demand for housing is really starting to impact many countries’ ability to accommodate their residents.
Demographics
This explosion is known as the demographic transition phenomenon, caused by a drastic reduction in mortality, which leads to a reduction in fertility and an increase in life expectancy. When death rates are low and birth rates are high, population growth increases and remains high as the population ages. However, this transition stage needs to be further broken down by nation. For example, India currently has the largest population, with 1,441 billion, followed by China’s 1,425 billion. In comparison, South Africa’s population is around 60,41 million, which seems meagre in comparison.
However, the National Planning Commission (NPC) says South Africa has a favourable age distribution profile, with the birth rate declining and life expectancy increasing, which it claims is the ‘sweet spot’ of demographic transition. Right up to 2030, the NPC believes that the total population will comprise more than a quarter of those aged between 15-29, and where they like to live is in cities.
City life
By 2050, says Mordor Intelligence, seven out of 10 people will live in cities, and this speed and scale will present difficulties in meeting the increased demand for, most especially, affordable housing and functional infrastructure such as transportation, jobs, and other essential services. The only way cities can cope with this is to build up.
High-rise residential buildings have proven most beneficial in densely populated cities, and with the trend towards mixed-use buildings that integrate residential lifestyles with commercial and public amenities really taking hold, more skyscrapers seem inevitable. Yet there are concerns about the effect these will have on skylines and energy consumption. China is home to some of the world’s tallest towers, and it is now limiting the construction of super skyscrapers to reduce the country’s very high energy consumption.
In some ways, this decision may also influence China’s property glut problem. With millions of unsold properties, valuations are seriously being impacted. Interestingly, economists there believe that the only way to invigorate economic growth for the country is to stabilise the property market. Beijing’s response is to turn its unsold stock into affordable housing, but this is not yet proving popular as buying from private developers at a low price risk will likely depress the market further.
In the rest of the world, city authorities realise they need to accelerate the conversion of ageing and unoccupied office premises to residential spaces and retrofit older buildings with sustainable power solutions, which can unlock up to 10-40% in energy savings.
Affordable housing priority
The global residential property market is absolutely essential for economic growth and stability, in that the Chinese economists are spot on, which is why SA, along with nations like Australia, the US and Canada, are pushing concessions for first-time home buyers. Any concession related to housing is crucial, particularly low-cost affordable housing. The question of how to make homes more affordable for low-income groups is often debated, and whether we are giving enough priority to the problem.
Whilst SA has its First Home Finance, a subsidy aimed at homeowners with low incomes, we still have a national shortfall of some 2 million affordable homes, especially for those who live in inadequate, overcrowded informal settlements. According to the Centre for Affordable Housing Finance (CAHF), the rate at which low-cost homes are being built is 136,000 per year, meaning that by 2030, only 1,5 million will be available.
Foreign investment
SA seems to be pushing our local property opportunities in foreign markets, and why not? As global nations experience population booms, property ownership (obviously depending on many influential factors, including employment opportunities and economic circumstances) tends to increase their local residential property values and the affordable stock becomes constrained.
As a result, and given SA’s currency value, our nation presents a very attractive package for those seeking to own homes. We have the weather and a diverse landscape, among many other attributes, and we love—and need—foreign investment. We even have infrastructure. Yes, it may be dubious to us, but when considering how much home can be bought with foreign currency, putting up with some inconveniences in service delivery is hardly a negative factor.
Rates and market pressures
Across the world, home loan rates are expected to be around 6,3% throughout 2025, with home prices expected to rise by 3,7%. Market pressures that will have an influence are the same as they have always been, be those economic, regulatory, fiscal, and trade. Generally, though, global economists remain optimistic that interest rates will continue on their downward trajectory, depending, of course, on whether any new global events or geopolitical situations emerge.
Overall sentiment
Since 2020, the property market has had to face enormous challenges, largely created by Covid’s influence on interest rates, inflation, and cost of living, yet it remains the world’s most asset-heavy industry, worth more than all global equities and debt securities combined (excluding gold), and almost four times that of global GDP, says Ascendix.
Based on some of Mordor Intelligence’s findings, property practitioners should note that the majority of buyers will remain GenX, and sellers will predominantly be older millennials. JLL Africa, in its Global Real Estate Outlook 2025, says that the key themes for the property market in 2025 are recovery, risk, and resilience. However, those three ‘R’s’ have been in play for the SA market before even the pandemic smashed us and will likely remain with us for a few more years.
