The gradual slowdown in the rate of growth in property prices across the country has left homeowners, buyers and investors wondering what could be in store for residential property for the rest of this year.
Even though we have recently seen several positive economic changes, a massive shift in consumer and business confidence is needed in 2018 to influence the property market. The current slowdown extends to the Western Cape – a niche market in itself – where property price growth has fallen below 10% for the first time in at least three years. Times are tough, but yet almost ironically, there has never been a better time to buy property.
In Gauteng and Kwa-Zulu Natal, the slowdown in property price growth has reversed with a marginal uptick in prices, possibly signalling that prices have bottomed out. However, this needs to be seen in the context of property prices growing by 3.5 to 5% in nominal terms, which is below the current rate of inflation. Other than in the Western Cape and more specifically Cape Town, property prices declined in real terms by the end of last year.
Downsizing from large homes that are expensive to maintain is a definite trend in cities like Johannesburg. Over time, this trend will put pressure on property prices for these sorts of homes.
Buyers in the sweet spot
With a slow economy, low consumer confidence and price-sensitive consumers, the key driver for buyers is value – a combination of position, price and size – at virtually every price level. We are even seeing this at the top end of the market. In most regions across the country, supply continues to exceed demand with cautious buyers spoilt for choice. Buyers are looking for the best deal they can get showing no fear of loss or urgency if they cannot get the property they want where they see the value.
This includes a reluctance to get involved in significant improvements to a property, believing they can pay the same value-driven price for a home that is ready to move into. First time home buyers continue to show strong interest in the market especially in the sectional title market, which offers low maintenance, secure and affordable living.
Sellers should not sit on the fence
The strong advice to sellers is that now is not the time to test the market to see if you can get your price because, for most, the answer will be ‘no’. Pricing your home in the current market requires a strong dose of realism and acceptance that this is a buyers’ market. 2018 will continue to be a great buying opportunity for property investors and now is the time to turn your hopes and dreams into bricks and beams.
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Read other related blog articles here: Should you sell your property now or wait?
Adapted from: MoneyMarketing.co.za