Tyson Properties' CEO, Chris Tyson, says key indicators suggest a promising shift in South Africa's property sector for 2024, from a buyer to a seller's market.
He welcomed the recent announcement by the South African Reserve Bank's Monetary Policy Committee that the repo rate remains unchanged at 8.25%.
Although the repo rate remains at a 14-year-high dating back to May 2023, Tyson is optimistic that this signals a period of greater stability for South Africa's property market which is good news for both buyers and sellers. And, he expects the repo rate to begin to drop during the second half of 2024.
This will balance out further turbulence that is expected during 2024, especially in the lead up to the Budget Speech in February which could herald increases in personal tax as well as property taxes.
Tyson notes a resurgence of optimism in the market towards the end of 2023, evidenced by an uptick in enquiries received by Tyson Properties across its key markets, along with an increase in first-time buyers.
Notably, the Johannesburg market displays renewed positivity, while KwaZulu-Natal and the continuously thriving Cape Town market also show promising signs.
"The economic fundamentals associated with subdued economic growth, high inflation and high unemployment remain daily realities. Even though the inflation rate has dipped, the possibility of fuel price hikes persists as do other increases which may impact on households' disposable incomes. As a result, we only expect the interest rate to begin to drop after the middle of 2024," he said.
Discussing the market dynamics in a recent radio interview, Tyson emphasised the significant role played by interest rates in recent times.
While certain areas have experienced declines of up to 46%, locations offering desirable lifestyle amenities, affordability, security, convenience, and quality schooling continue to perform well.
The entry-level market, primarily comprising first-time homebuyers, has faced the brunt of the impact, while properties priced at R3.5 million and above remain relatively stable across all areas.
In response to high interest rates, there has been a notable surge in demand for rental properties, particularly among young professionals.
Tyson cites Johannesburg's growing population and the desire for career mobility as key drivers behind this trend, highlighting the preference for rental accommodation over homeownership among younger demographics seeking flexibility in their living arrangements.
Tyson is buoyed by recent trends, citing a Lightstone Report indicating an appetite for homeownership among first-time buyers, despite a 29% downturn in the 2023 market.
His property group has already seen increased numbers of enquiries nationally, indicating that change is coming.
“In fact, I believe the shift started on New Year’s Day and will gradually continue over the next 24 months. We entered 2023 with a negative outlook. We were expecting interest rates to increase and even talked of the power grid collapsing. At the beginning of 2024, we are entering the year with a more positive outlook. The sentiment in the market is exciting,” said Tyson.
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