2014, a Good Year for Property
Category Property market overview
The new year is upon us and 2014 promises to be a big year as political parties gear up for the national election which will likely take place in April and with Cape Town taking up the mantel of Design Capital of the World for the year.
Both of these events promise to keep South Africa on the forefront of international consciousness and have the power to do much for the local economy and national standing; all of which could generate greater investor confidence and stability.
Predictions on the residential property market
When it comes to the local property market; buyers and sellers have long waited for an upswing reminiscent of the 2006/2007 heydays. While that moment has not yet arrived industry analysts and practitioners agree that the market is set to grow by around 9% this year – a significant improvement on matters in 2013 and further back.
“Leapfrog Property Group has already experienced an upswing with our December sales having increased by 44% year on year while commissions earned during the same period rose by 63%”, says Bruce Swain, MD of Leapfrog Property Group, “We believe that 2014 will see further growth as banks have relaxed their lending criteria somewhat and the interest rate is predicted to remain stable, at least until 2015”.
Reasons to be optimistic
According to annual house price analysis conducted by Lightstone; house prices grew by 7% on average in 2013, bolstered by a CPI (Consumer Price Inflation)of 6% and a stable, low repo rate of 5%.
The FNB Home Buying Estate Agents Survey for the 4th quarter of 2013 supports these findings stating that it has seen “a resumption of residential activity improvement after previous quarter’s slight decline, as the residential market seemingly defies very weak economy”.
The survey has also found that a number of agents are again experiencing stock shortages and “a broad trend towards a faster pace of selling, despite a slight 4th quarter rise in average time on the market”.
What about politics?
For some the establishment of Agang and the EFF, the breach between NUMSA and Cosatu and recent polls that reveal a 19% slip in ANC approval ratings point to political upheaval and uncertainty in the coming months. Swain however does not see this as cause for concern, “Regardless of the outcome of the upcoming election and its results, property has been and will continue to be a solid investment. Property has continued to steadily increase in value and that’s not set to change – people need a place to live, irrespective of who is in government”.
Better forewarned
Home owners and buyers have enjoyed a low interest rate for a number of years now and it would seem that this year will brook no big changes with analysts predicting that an increase will likely only occur in 2015. “While we’re expecting the interest rate to remain stable throughout the year my advice to home owners would still be to pay as much into their bonds as possible as the rates will eventually go up again – affecting disposable income – and the wise will prepare for this eventuality now”, says Swain.
Author: Leapfrog Property Group
