Optimism in the residential property market
Category Advice
Despite South Africa’s current economic and political plight, property experts predict that there will be little change in the dynamics of the residential market for 2016, with trading patterns remaining relatively stable. Below are a list of factors which experts believe will cause the 2016 residential property market to remain positive:
1. Certain areas will thrive
While the country’s economic uncertainty poses as a threat to the property market, certain areas will continue to prosper and flourish due to their high demand. Areas which offer a balance of “live, work, play” features will continue to see considerable growth and thrive in sales. Young professionals seeking a metropolitan lifestyle will continue to invest in and fuel areas such as Umhlanga and Camps Bay. According to CEO of Private Property, Simon Bray, "This will be the story of the market in 2016, some areas will perform strongly while others slow down. Location will be more important than ever."
2. Expansion of major cities
South Africa’s cities are growing rapidly as a result of urbanisation and major cities will continue to expand as developers build on the available land. The long commutes to work and traffic congestion related to choosing to live away from the city, means that more South Africans are moving towards the city into smaller properties. People are sacrificing space for a more convenient location and as the demand these properties increases, more developments are being built to accommodate new residents.
3. Demand for sectional title property
2015 saw a high demand for sectional title properties and according to Private Property CEO, Simon Bray, 2016 isn’t going to be any different. It is predicted that sectional title properties will continue to grow in popularity in 2016 as Bray states that, “the number of plans passed for sectional title housing in the last 15 years has increased by around 40%”. The convenience and affordability of a ‘lock up and go’ property will continue to appeal to the middle class, leading to further growth in this trend for 2016.
4. Popularity of secure estates
According to property experts, secure lifestyle estates have become increasingly popular over the years as homeowners are seeking smaller estate homes. The convenient access to amenities, recreational facilities and lack of maintenance makes these properties a more appealing option, particularly to the upper middle class who seek the security offered by these properties. This indicates that 2016 will see a larger demand for these estates, leading to a considerable growth in their capital.
5. Upside for buy to let property owners
The potential threat and burden of high interest rates, a rising inflation rate and expenses such as: rates, taxes and electricity, may be dissuading for first time home buyers. This may cause buyers to delay purchasing property and resort to leasing a property as an alternative. Thus, the thriving rental market is a possible advantage for the buy to let property market, as there may be a higher demand for rental properties in 2016.
6. South Africa is going Green
With the escalating cost of electricity, shortage of water and the lingering threat of load shedding, eco friendly property has never been more attractive. Experts forecast that Menlyn Main, Africa’s first Green City, will act as a trendsetter for the residential sector, leading to a growth in eco friendly residential developments. These developments are said to embrace the ideas of sustainable energy, waste management, convenient public transport and water consumption. Properties within these developments are likely to be more affordable in terms of household expenses such as: electricity and water costs.
While there is uncertainty regarding South Africa’s current economic and political environment, there are several factors which will ensure that the residential property market remains buoyant. Trends such as: Higher demands for certain property types, sustainability and the popularity of specific areas, will hopefully aid the growth of the residential market this year.
Author: Dormehl Property Group
