Whether technically there is a recession or not – defined as two consecutive quarters of negative quarter-on-quarter growth – the reality is that the economy is subdued. Growth has fallen well short of heightened expectations which began with the change in the leadership of the country at the beginning of the year.
Gaye de Villiers, spoke to Dr Andrew Golding, Chief Executive of the Pam Golding Property Group on what this means for buyers and selllers right now.
An unfortunate combination of factors (including the potential threat of a global trade war, a weakening Rand and further local interest rate cuts unlikely) has further muted optimistic sentiment. Economic growth is likely to continue to be sluggish for the balance of 2018 and although forecasts are for slightly stronger growth in 2019, this will take time to play itself out into the property market. Therefore generally speaking, this suggests that the local property market will continue to be tepid with occasional areas of outperformance and excellence. As far as regional specific comments are concerned, the Western Cape has, as has been widely reported, slowed considerably. Bearing in mind the way this market ran well ahead of the prevailing subdued economic realities, fuelled, in part by a strong semigration trend, a natural correction was inevitable. Notwithstanding this current correction , the essential property fundamentals remain strong and this market will sooner or later begin to move again.
All is not doom and gloom in other parts of the country either. The housing market continues to show resilience as there are a number of positive underpinnings – such as a young demographic eager to buy property and a financial sector with an appetite to extend mortgages.
Furthermore there are areas that continue to boom – areas that are fulfilling a particular demand. Examples which come to mind are suburbs which offer an alternative to congestion, a flourishing business hub and easy access to good schools, for example Claremont in Cape Town or Durban North and uMhlanga in KwaZulu-Natal. There are also areas which offer access to good schools and work, but better value-for-money property such as Cape Town’s Northern Suburbs or green mixed-use developments such as Menlyn Main in Pretoria.
Overall the housing market is likely to remain under pressure against the current economic and political backdrop – but certain nodes, as illustrated above, will continue to flourish because they offer a particular set of circumstances for which there is ongoing demand.
Dr Golding’s advice? Location is now more important than ever, as is accommodation-types that meet the market demand. Also, take into account the following factors: location of the demand; traffic congestion and travel distance to schools and the workplace, as the fuel price continues to rise. Accurately pricing your home to sell is vital. For buyers, don’t overpay because in the shorter term, prices may not increase as much as they have in the past.
If you are considering selling, buying or letting your home, we recommend contacting Pam Golding Properties to find out more about your area and to obtain professional advice or a valuation.
