Now could be a good time to buy property in SA…

If you’re thinking about buying a property in South Africa, right now may be your time to shine. The market is in a very favorable condition for first-time home buyers, and less so, for those who are looking to sell. Keep reading to find out what the current property market looks like and what you can expect.

South African homeowners have little to celebrate. House prices have dropped by 4.8% in the last decade. This may be troubling for homeowners; however, these conditions are perfect when you’re looking to buy a property in South Africa. Rhys Dyer, OOBA, said first-time home buyers may benefit the most from the current state of the property market. House price growth has slowed during 2019, making it more affordable for first-time home buyers

We are currently in a buyer’s market, which is ideal for first-time buyers who want to seize an opportunity to enter the market. It was expected that the housing market would increase after the elections earlier this year. However, according to the FNB House Price Index (HPI) the market has been steady over the past few months, as we can see below.

Although the market is slow, the FNB HPI indicates that there has been a slight increase during 2019. Findings indicate that the nominal house prices for July were 3.3%, compared to August sitting at 3.6%, growing with 0.3% over that past few months. Although the market seems to be growing slowly, it still lags behind the 3.9% annual growth rate of 2018.

Although the market has under-performed, FNB HPI suggests that the demand-supply gap has been slowly closing. This is because there is a slight improvement in demand, while less properties are up for sale in the current market.

Supply of property in the market has been stagnant because of sellers withdrawing their properties from the market. The current market conditions are working against sellers. Homeowners are not getting the asking price for their properties. In fact, sellers are on average dropping their asking price by 9% just to strike a deal. It’s a bad day for sellers, but a beautiful sunny spring afternoon for buyers.

FNB said that that more investors will be driven to buy a property due to attractive prices, increasing competition between mortgage lenders and lower interest rates. This is reflected in the growth of mortgage extensions which averaged at 4.3% y/y for September 2019, compared to a 3.4% y/y during the same period for 2018.

Forecast for 2020

FNB property economist Siphamandla Mkwanazi, has said that there has been a slight positive shift in the market during 2019. He said that house price growth could be expected to increase by 4.5% – 5% for 2020. That is if we see another interest rate drop at the end of this year.

Positive results in the market will only happen over time, particularly when supply still outperforms demand. Another rate cut at the end of the year would make a huge difference in sales volumes and improve prices for 2020.