Tuesday, December 11

Slow economy, rising costs and politics hit high end of market hard

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"While the market is in decline, it is “nowhere near post-2008 to around 2012/3.”

Property sales weakened in 2018, and Seeff’s Samuel Seeff says this was especially the case in the price range above R3 million in Joburg and Sandton, and above R5m in Cape Town. For the sub-R1.5m sector of the market, it remained “largely business as usual”.

Overall, sales volumes dipped by around 20% to 40% from the 2014/5/6 peaks, with trade especially slower at the luxury end, Seeff says.

“Given the current economic and political climate, compounded by concerns about property security, high net-worth buyers and investors stop buying/investing. They may buy for less and prefer to invest their money elsewhere.”

Price growth flattened but there has not been price devaluation yet, he says. While the market is in decline, it is “nowhere near post-2008 to around 2012/3.”

In terms of house price inflation, Pam Golding Properties’ Andrew Golding says the Western Cape continues to be slow, but prices are still rising at double the pace in the rest of South Africa. KwaZulu-Natal inflation is currently 4.27% and Gauteng 2.83%.

Seeff says there has been a “slight rise” in selling due to financial concerns or downscaling.

The “substantial increase in the tax burden”,  including an increase in VAT to 15%, put pressure on households, says Golding.

“While the inflation outlook has deteriorated, the subdued economy has limited the ability of companies to pass on higher costs to households, allowing the Reserve Bank to leave interest rates unchanged this year.” 

Yael Geffen, chief executive of Lew Geffen Sotheby’s International Realty, says: “It’s been a challenging year across the country for the real estate industry, though obviously not without highlights.

“With the exception of Cape Town, the coastal metro housing markets have proved the most resilient. We saw solid growth and consistent market activity in the north coast regions of KwaZulu-Natal, the Eastern Cape coastal regions and the Garden Route, most notably Knysna and Plettenberg Bay.”

The middle and lower markets have been “very resilient”, says Greeff Christie’s International Real Estate’s Mike Greeff.

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