Major topics surrounding residential property for 2019
Category Property News
Throughout 2018, the residential property market experienced its fair share of ups and downs as a result of changes in the political and economic landscape. The year started off on a good note when Cyril Ramaphosa was appointed as the leader of the ANC and president of the country. During this time, optimism filled the air and investor confidence was boosted, resulting in a stronger Rand. However, it was also a year where many people struggled to make ends meet due to the rising costs of living, as well as the recession which began in September and ended at the beginning of December.
Now, as we ease into 2019, there are various trends and discussions that will dominate the residential landscape and somewhat influence the sales and rentals market in both Gauteng and the wider country. Popular discourse among analysts and experts surround the topics of land reform, the upcoming elections and fluctuating interest rates.
Land Reform
The concept of land reform has undoubtedly been a contentious issue among South Africans since the dawn of democracy in 1994. Regardless of the emotion that arises when the topic is brought up, the government is going ahead with plans to implement it while upholding the country's constitutional integrity. Popular opinion on how the policy will influence the real estate market revolves around its implementation - if the process is done with strict adherence to the rule of law, policy certainty and the enforcement of contracts - then the property market will not be significantly affected. And this is especially true for property investments as these rely greatly on a stable economy and political environment for growth. This means that the residential development pipeline will remain relatively unchanged with prominent new developments such as modern sectional-titles and mixed-new developments planned for Gauteng.
When interviewed by the online news site, Fin24, ratings agency S&P had positive feedback about land reform and explained that SA's independent judiciary is the primary reason that investments will remain strong when the progress of land reform furthers. However, as in all polarising situations, some investors may see it as risky and pull their capital out of the country (although this will make up only a small percentage).
The Upcoming Elections
The South African national elections will take place in May 2019 - and in the build-up to this - the residential property market may be greatly influenced by a "wait and see" attitude among potential home buyers. Some are likely to avoid making any big investment commitments while awaiting the results of the elections. However, this also means that rental property will grow in demand and tenants are likely to rent for longer periods of time, thus resulting in favourable conditions for buy-to-let investors.
Interest Rates
2019 started off with some good news for home buyers as the South African Reserve Bank (SARB) made the decision not to increase the repo rate, and over the coming months, the rate is expected to remain unchanged. Although some buyers may await the outcome of the elections before deciding to buy a home, many more are closely watching the repo rate as this has a direct correlation with the prices of goods and services.
When the interest rate remains the same, as it is now, it means that home buyers don't need to worry about escalating interest charged on their home loans by lending institutions. This provides peace of mind as affordability levels remain the same, allowing buyers to diligently pay towards their loans. While, those on the fence, may be encouraged by the unchanging rates to take the leap and purchase their own homes.
However, it is important to note that interest rates are expected to rise by 2% over the next 18 to 24 months, which will inflate the general costs of living. Therefore, many buyers will need to prepare for this by saving as much as they can from the onset of the year.
2019 will be a year where land reform, the elections and interest rates take centre stage. But, even amid this, the property market will only be influenced by these factors to a certain degree. Ultimately, lifestyle factors such as a growing or shrinking family will be the most important motivation when buying or renting a home.
To find out more about the available homes in Kempton Park and the surrounding areas, speak to our helpful agents at De Lucia Group today.
Author: De Lucia Group
