South African property market predictions for 2017

As much as we don't like to admit it, 2016 hasn't been a good year for many of us. We've seen tremendous upheaval across the globe including Brexit, a refugee crisis and a controversial American president elect.

We’ve also lost a number of famous faces - the iconic David Bowie, Prince and our very own, Sfiso Ncwane spring to mind. Things haven't been that rosy in South Africa either with corruption taking centre stage alongside growing political dissatisfaction. There have however been many positives.

The rand has strengthened after its dramatic drop in December last year. Key political figures, including our president, have been found wanting by the courts and forced to uphold the constitution and although the nation’s rugby team has seemingly lost its way, the national cricket side is making us all proud.

Much has been written about the country’s property market and yes, while there has been a general slowdown in the market, prices are, for the best part, holding their own. The banks are still granting bonds and people are still investing in property on a grand scale.

Economists and commentators in general are more positive about growth next year, while business confidence has improved, which in turn enhances overall sentiment which is a key driver of the residential property market.

Much depends on the performance of the rand, but on balance the general expectation is that inflation will fall quite noticeably by the second half of 2017, hopefully with the Reserve Bank looking to cut interest rates during this latter part of the year.

While the prospect of anticipated stronger US growth would support the South African economic growth rate, a stronger US dollar and increase in US interest rates may impact the rand, with implications for inflation and exerting pressure on our own interest rates.

Against this backdrop a recurring theme internationally both currently and historically is that global uncertainty makes property an attractive investment, with potentially good returns and the opportunity for capital preservation.

We anticipate that 2017 will see the continuation of a number of prevailing trends. These include:

• the desire among first time buyers to acquire a foothold on the property ladder and own their own homes;

• an ongoing trend towards investment in mixed-use developments mainly in metropolitan hubs, as well as the development of secure private estates and sectional title complexes. This incorporates the growing popularity of a convenient lifestyle within easy reach of all amenities and transport, and encompassing the live, work, play, shop concept;

• the transition to ‘green’ and sustainable living as pricing pressures resulting from the prolonged drought and rising electricity tariffs will see a continued shift to energy and water efficiency; and

• the importance of understanding the dynamics of the housing market when making a sound investment decision. These include factors such as the ongoing migration of people, supply of new housing units and lifestyle trends.