13 Dec 2013
Buyers who were reluctant to invest in the property market during this year will still see viable property options in the future, although at a higher cost.
He notes that although RE/MAX figures are bucking market trends, general sales volumes throughout the property industry are still not at the levels that were seen during the boom.
However, the overall property market continues to improve and the number of properties sold each year seems to be on a steady upward trend.
“While the recession brought about massive changes in the property market over the last five years, since 2011 the market has normalised and we seem to be on a far more stable and predictable path,” says Goslett.
That said, he says it is very difficult to predict exactly what the future holds particularly considering the many variables that can impact the property market that the real estate industry has no control over. According to Goslett, to have a more accurate perspective as to what lies ahead for the property market during 2014, there are a few key elements that need to be considered.
These are:
Interest rates While the prime interest rate is currently at 8.5 percent, the lowest that the interest has been since 1973, economists predict that the interest rate will probably see an increase late in 2014.
Goslett advises consumers and homeowners to prepare for this by paying down as much debt as possible. Increase in property prices We have already seen a steady growth in property prices this year, with some areas seeing prices that are far beyond what was seen during the boom, he says.
“As demand for property grows and stocks deplete, we are likely to see higher prices.”
Although prices are only expected to grow by single digit percentages during 2014, the fact still remains that they are indeed on an upward trend, and that is not likely to change, says Goslett.
Opportunity for new construction The stronger demand for property in the current market and inventory stocks depleting among existing homes will bring about further opportunity for the construction of more homes and developments, giving buyers further property options during 2014.
While the prime interest rate is currently at 8.5 percent, the lowest that the interest has been since 1973, economists predict that the interest rate will probably see an increase late in 2014.
Buyers who were reluctant to invest in the property market during this year will still see viable property options in the future, although at a higher cost.
Access to finance Over the past year, South Africa’s financial institutions have marginally relaxed their lending criteria, which is likely to continue in 2014.
“Banks have already started to show a greater lending appetite, which will see a marginal increase next year depending on how the new credit amnesty bill impacts lending practise.”
He says the percentage of loan application approvals has seen an increase to over 51 percent, which is a huge improvement from the 26 percent seen during 2009.
Goslett points out that the market could also see a greater number of cash buyers during 2014.
“There are many affluent property buyers and investors with the means to purchase property, but they have been waiting in the wings to see which way the economic winds will blow before committing.”
With a more stable environment and property prices on the rise, these buyers will more than likely take advantage of the improving market, he says.
Security and amenities will continue to be top priorities.
According to Goslett, there is likely to be an increased trend towards security and gated type communities next year, with more and more South Africans pointing to security as their number one priority when choosing where to live.
Demand will grow in areas that cater to these sectors of the property market, which in turn will push up prices in these areas far quicker than the average.
“We are also likely to see an increased trend towards smaller or more manageable homes in 2014, with consumers opting for properties that are closer to their needs such as their place of employment, their children’s schools and other amenities like shopping centres and medical facilities. “This will of course all be dependent on the consumer’s age, their financial profile and current life stage,” says Goslett.
He notes that all of these predictions will be largely dependent on and driven by consumer sentiment, which will be fuelled positively or negatively by factors such as the run up to elections, status of labour unrest and various other possible scenarios. Although it’s impossible to predict what will happen in the legislative environment, general economic conditions and political issues, we can control how we react to changes in our environment and adapt accordingly, notes Goslett.
“Regardless of the conditions we find ourselves in during 2014, historically real estate has proven to be a good investment over the long term and with good research and savvy choices, buyers will find some good opportunities in the property market in the year ahead.”
He adds that South Africa’s property market has returned to normal and is doing well and is expected to continue on its current path of normal trading conditions in the year ahead, with no massive peaks or lows.