The residential property market remains subdued amid the current political noise and economic uncertainty, and it seems city skylines are less spiked by cranes and scaffolding.
New buildings and developments that are still being constructed are proceeding on a smaller scale, and financiers are less inclined to fund big projects.
The residential market has been negatively affected by poor market sentiment and John Chapman, a director at Rabie Property Group, says investors are “sitting tight” and not committing any capital to speculative ventures. He is, however, hoping the market will improve after the elections and that people will be more confident about the future.
This hope is not unrealistic. The start of 2019 has already seen a slight improvement on 2018 and Bill Rawson, chairman of Rawson Developers, believes that, as the market becomes accustomed to the political distractions, it should improve.
“After the elections in May I believe things will get better and buyers will become more aggressive, providing sellers are setting realistic prices, which they seem to be at the moment.”
It is in times like these that Rawson believes a backlog of demand accumulates, which “could lead to a lot more activity in the near future”.
Harcourts Africa chief executive Richard Gray is convinced 2019 will see more developments launched, both commercial and residential.
The large-scale investments in inner-city living that have been taking place recently are transforming the CBDs of Cape Town and Joburg, and he says “real efforts” are being made to make properties in such areas available, while also revitalising them.
FWJK also predicts a better year, with chief executive Dave Williams-Jones saying the sector has not performed well over the past few months due to decreased demand associated with the country having been in recession until recently, coupled with investor anxiety over the upcoming elections.
However, he adds: “We see an upturn commencing after the election with a gradual normalisation over the 12 months thereafter.”
The top and bottom LSM sectors will perform better than the middle LSM sectors and “developments that offer good value for money in centralised locations will always sell”.
In the highest LSM sector prime development locations will see continued demand. In addition, Rawson says developments offering “small affordable opportunities in secure environments” will be in demand this year, and this will be the case until crime in South Africa is “brought under control”.
Chapman is also confident about the retirement market in which well-located developments offering improved lifestyle benefits are in short supply.
Buyers will be looking for value, especially since selling prices peaked in mid-2017. Even with the economic challenges, Rawson says residential property is easily understood by the average investor and home occupier, so it is a popular investment medium.
Even when the returns are not great it is a stable source of wealth which appeals to the majority of the population. “Should we enjoy a strong and fair election, the whole economy will be on an upswing.”