December 2 2024 23:00
SOUTH AFRICA
Landsdowne Property Group, a managing agency is optimistic about the prospects for the residential market in 2025.
The group says unsurprisingly that improving market sentiment, rising property demand in Johannesburg and the Western Cape, and the potential effects of further interest rate cuts are key factors contributing to this positive outlook.
Jonathan Kohler, Founder and CEO of Landsdowne said it’s more of the same next year.
“Demand for buy-to-let properties will remain strong, as many individuals are unable to purchase homes at this time and prefer to use their available funds to pay down debt. However, in select areas of Johannesburg and the Western Cape, driven by semigration trends, we are starting to see an increase in buyer activity,” he says.
Kohler said Johannesburg has not seen capital appreciation since 2010, making it a buyers’ market. “This is an opportune time to invest in property in the metro, but many potential buyers are hesitant due to financial constraints and inadequate service delivery,” he says.
An increasing number of buyers, especially young professionals and families, are choosing homes in secure, lifestyle estates, as reflected in the growing demand for these properties.
Buy-to-let investors are picking up value in the market. For instance, a 45m² apartment priced at about R680,000 and renting for R7,000 per month offers net rental yields of 10.27%. Similarly, a two-bedroom, two-bathroom apartment priced at R1.2m and renting for R9,750 per month yields a net return of 7.36%.
The FNB Property Barometer for October highlighted an uptick in market activity, with Gauteng and the Western Cape seeing a surge, while the Eastern Cape and KwaZulu-Natal recorded more moderate levels of activity. The report also suggests that declining home prices in Gauteng may be attracting more buyers, reinforcing our belief that now is an ideal time to invest in property within the metro, said Kohler.
Semigration to the Western Cape is expected to persist into 2025, as buyers increasingly seek quieter, more peaceful lifestyles. The Western Cape is expected to remain the top destination for semigration, while those in search of better employment opportunities are relocating to Johannesburg. “Many individuals, particularly young professionals, are opting to rent in Johannesburg first before committing to buying property,” Kohler said.
He said with many households still financially constrained, homeownership is not a viable option for most. As a result, renting continues to be a popular choice, as it offers the stability of fixed monthly expenses, protecting tenants from sharp cost increases.
Improved market sentiment and increased activity have led to shorter selling times, with properties now averaging 11 weeks and two days on the market, down from 12 weeks and two days in the second quarter of 2024, according to FNB. This decline was seen across all regions, particularly in the higher-priced segments.
Meanwhile Bradd Bendall, National Head of Sales at Betterbond, a mortgage bond originator, said certain parts of the country could soon see record high house prices.
Bradd Bendall, National Head of Sales at Betterbond
The residential property market is showing strong signs of recovery, with house price inflation surpassing pre-pandemic levels, he said.
“Homes are now on average 39% more expensive than they were in 2019, before the start of the pandemic. There has been year-on-year inflation of 4.1% for first-time buyers and 3.3% for all buyers. In nominal terms, the average annual rate of house price increases for all buyers is 5.9%. With consumer inflation at 3.8%, there is a strong likelihood that house prices will start increasing in real terms over the next few months,” he said.
Home loan application volumes jumped by 30% compared to this time last year.
“As reported in BetterBond’s November Property Brief, the quarter-on-quarter results are also impressive, with home loan application volumes increasing by 18%”, sad Bendall. “Although house prices took a slight knock in July and August this year, compared to the second quarter of 2024, the year-on-year movement suggests that a property market boom is imminent,” he said.
247@propertyflash.co.za
