With an election coming in May, 2024 might prove to be another unsettled and raucous one in South Africa.
Given this backdrop, many people will naturally adopt a wait-and-see attitude when it comes to important decisions such as selling or purchasing a house.
However, that could be a mistake, according to Herschel Jawitz, the chief executive of Jawitz Properties.
“It’s true that there is uncertainty at the moment, but if you take the time to look, there are opportunities for sellers, buyers and investors. We tend to see only one part of the picture—one needs to take everything into account,” Jawitz said.
Jawitz identified numerous factors to consider this year when purchasing property:
Inflation is coming down with interest rates look set to ease
Inflation is presently within the Reserve Bank’s 3% to 6% target range, with the Governor of the Reserve Bank projecting an average of 5% in 2024.
In response, interest rates are largely predicted to fall by 0.5% to 1% this year.
Even this little reduction will have an impact on bond repayments, which is good news for financially challenged homeowners and purchasers.
For example, a 1% decline in interest rates may save R1,000 per month on a R1 million house loan. Food inflation is expected to fall further, boosting disposable income.
Banks are lending
Despite a slowing economy and weak property price increase, bank lending remains optimistic.
Because of increased competition, banks are giving below-prime rates to the majority of purchasers, and home-loan approval rates and deposit requirements have stayed stable—which is excellent news for first-time buyers.
The market is active in the mid-market price range including first time buyers
According to OOBA, one of South Africa’s top mortgage originators, first-time buyers continue to account for 48% of all applications, down from 56% a few years ago but still a promising figure.
Another important factor in this context is that property prices in all but a few regions of the market have fallen in real terms during the previous several years.
Buyers who are willing to take a five-year or longer view have the option to purchase at prices last seen five or even ten years ago in specific places.
Don’t try to time the market
It is currently a buyer’s market, therefore sellers must price their houses appropriately.
Even in the Western Cape, where the market is better in terms of pricing and activity than in many other areas of the nation, purchasers can receive a better deal than they would have in the past.
“Buyers are making decisions based on value: ‘Can I get more house for the same money or can I buy for less and still get everything I want.’ Sellers must understand that they are competing with other sellers for a limited pool of buyers. While sellers might have to take a lower price than wished, they have the corresponding opportunity to buy in the same market,” said Jawitz.
IOL Business