SA property outlook is optimistic for a buyer's market
After the economic recession in 2008, house price inflation in the last decade showed lacklustre growth, only peaking at 6.35% at the end of 2014. In 2019, house price inflation ended just below 2% - the first time that actual inflation came in under Lightstone's low road scenario forecast, which was at exactly 2%.
After starting the year off with negative GDP growth in the first quarter, South Africans were desperately looking for an economic silver lining throughout 2019. With not much of an economic turnaround, we saw the low road scenario play out. This means we started 2020 off with the possibility of house price inflation breaking through the 0% barrier in the second half of 2020 and could end off the year with a 1,3% decline in home values should the low road scenario play out again.
Realistically, South Africa can expect more of the same in 2020 with house price inflation ending in positive territory but just barely above 0%. The forecasts we provide are aimed at guiding our customers’ strategies as well as their investment and purchasing choices.
Although the current economic status quo does not bode well for the health of the property market, the positive news here is if you are looking to purchase a home, it’s a great time to do some bargain hunting. Suffice to say the current grim outlook will likely not last forever with property still being a sound long term investment.
This is supported by a high road scenario forecast where Lightstone predicts a positive turnaround of house price inflation in the second quarter to end the year off on a positive trajectory.
When evaluating the different value bands’ performance, the trend is similar to what was experienced in the last two years. The affordable market is expected to remain the fastest growing value band, which was more robust during the last four years (where the higher end of the market increasingly suffered at the hands of low economic growth and policy uncertainty).
In 2019, the luxury property sector entered nominal house price decline for the first time since the 2008 recession and is predicted to experience further negative growth during 2020. Another unique finding within the value band forecasts is that, in 2020, sectional scheme growth is projected to outperform the freehold property sector with positive house price growth.
After starting the year off with negative GDP growth in the first quarter, South Africans were desperately looking for an economic silver lining throughout 2019. With not much of an economic turnaround, we saw the low road scenario play out. This means we started 2020 off with the possibility of house price inflation breaking through the 0% barrier in the second half of 2020 and could end off the year with a 1,3% decline in home values should the low road scenario play out again.
Realistically, South Africa can expect more of the same in 2020 with house price inflation ending in positive territory but just barely above 0%. The forecasts we provide are aimed at guiding our customers’ strategies as well as their investment and purchasing choices.
Although the current economic status quo does not bode well for the health of the property market, the positive news here is if you are looking to purchase a home, it’s a great time to do some bargain hunting. Suffice to say the current grim outlook will likely not last forever with property still being a sound long term investment.
This is supported by a high road scenario forecast where Lightstone predicts a positive turnaround of house price inflation in the second quarter to end the year off on a positive trajectory.
When evaluating the different value bands’ performance, the trend is similar to what was experienced in the last two years. The affordable market is expected to remain the fastest growing value band, which was more robust during the last four years (where the higher end of the market increasingly suffered at the hands of low economic growth and policy uncertainty).
In 2019, the luxury property sector entered nominal house price decline for the first time since the 2008 recession and is predicted to experience further negative growth during 2020. Another unique finding within the value band forecasts is that, in 2020, sectional scheme growth is projected to outperform the freehold property sector with positive house price growth.
| With the continued revelations of mismanagement across the public sector, corruption and the looming threat of a junk status downgrade by Moody’s, there is no doubt that consumers are finding it hard to stay positive. There are, however, real opportunities to be found for potential buyers and investors, specifically in the low-end affordable market. South Africans look to policy makers to urgently implement growth-inducing policies and remove uncertainty from the political sphere but, until that happens, it is incredibly important that home buyers and investors engage with knowledgeable partners to understand the hyperlocal factors that could protect their investment through the tough times. |
| With the recent declaration of a state of disaster in our country specifically relating to the Coronavirus (Covid-19), and the various measures imposed and suggested by the President to slow the spread of the virus, we would like to keep you informed of the specific measures Lightstone will be taking to assist in curbing the spread and minimising the impact of the Covid-19 virus on our broader society. Click here to read our full Covid-19 response plan. |
