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The latest round of real estate statistical reports indicate that the market has turned the corner and that home buyers, sellers, investors and tenants can all look forward to a better year in 2025.
This is most clearly expressed in the Absa Homeowners Sentiment Index for the third quarter of 2024, which shows an 84% level of confidence in the future of the residential property market, compared to 81% during the same period of 2023.
The bank says this reflects consumer optimism that there will be an upturn in property market activity in the medium to longer term, and in line with this, buying sentiment shot up to 73% in the third quarter from 67% in the same period of 2023, while seller sentiment improved to 48% from 46%..
The main drivers of positive sentiment in the market, Absa says, are the beliefs that property is and always will be a secure asset; that property always increases in value over time and that property can create long-term income.
Significantly, the percentage of prospective buyers who are concerned about high interest rates has fallen from 57% to 50% due to the start of an anticipated rate-cutting phase in September, while the percentage of buyers concerned about economic instability has dropped from 59% to 49%.
Among prospective sellers, 55% now believe they can get a good price for their property, but only 25% believe that it would be easy to sell. The main concerns among sellers are that the buying power of prospective buyers has decreased, and that the economy is not stable, leading a large percentage to believe they should hold off selling now if they can afford to do so.
Meanwhile, the latest Residential Property Price Index release by StatsSA shows that home prices in the first half of this year were still growing at rates well below inflation in most parts of the country. The exceptions were the Western Cape, where home values showed a 7,6% year-on-year increase in June and North West, where values showed an annual growth rate of 4,3%.
By contrast, home values in Gauteng have been affected by declining buyer demand and a growing oversupply of stock since 2021, and actually showed a 1,1% decline in June compared to the same month of 2023. However, it is still the financial "engine" of SA and its fortunes are set to improve as the economy rebounds next year. Consequently, it not only offers prospective buyers and investors the best current value for money, but also excellent prospects for future returns.
This is also reflected in the Absa report, which shows that confidence in the Gauteng market increased to 86% in the third quarter compared to just 66% in the same period of 2023.
This put it just below Free State, which had the highest regional confidence rating of 89%, and well ahead of its main rivals for residential property purchases, KwaZulu-Natal (82%) and the Western Cape (80%).
Author: Chas Everitt