Real Estate Investor Magazine South Africa February/ March 2020 | Page 15

T
he diverse property sector has survived the woes of
2019 regarding Eskom’s load-shedding and Moody’s
downgrades. Of the many industries within the
property sector, the residential property market has stood
up remarkably well. Pam Golding Property Group Chief
executive, Dr Andrew Golding predicts that there have been
around 200 000 transactions that have taken place in the
overall South African residential market in the year 2019.
“In numbers that’s probably around 10% down, and around
15% down overall in terms of value,” He said.
The residential property market is not new to this
downcycle, and given the state of South Africa’s economy,
Dr Golding thinks the residential property market has been
remarkably resilient. “We are starting to see just the beginning
signs of what feels like near or at the bottom of the current
downcycle,” He said.
“The diverse property sector
has survived the woes of
2019 including Eskom’s
load-shedding and Moody's
downgrades.”
It’s various positive factors that keep the residential property
sector just above the bottom of the downcycle. These factors
include the demographic presence of a younger population
in the property sector, relatively low interest rates, first-time
property buyers that fuel property purchases/rentals and a
strong appetite for lending from increasingly competitive
financial institutions. However, there are many other factors
that continue to affect the downscaling of the residential
property sector, including global headwinds.
“The residential market is largely governed by sentiment,
both locally and internationally. Sentiment certainly isn’t at an
all-time high, and the consequence of that is also adding to the
situation we find ourselves in, in the property market over the
last 12 months. I suppose one has got to look ahead and ask to
what extent is the situation going to stay the same? Potentially
get worse or potentially get better?” said Dr Andrew Golding.
Tourism boost
Following South Africa’s 2019 overall achievements in the
global space, from the 2019 Japan Rugby World Cup victory
to winning Miss Universe 2019, the country has been well-
represented on a global scale. These achievements are likely to
have an influence on the growth of inbound tourism and the
economic growth of the country (amongst other things). South
Africa offers beautiful landscapes and spectacular coastlines,
vibrant cities and rural places of interest. For the innovation of
entrepreneurial attractions and accommodations within the
tourism industry, the growth of the economy in the country is
important. It is also through the strengthening of the rand that
TRENDING
a significant number of visitors and investors in the residential
property market would be easily attracted.
“One of the factors we believe could prove a boost for South
Africa’s economy and even provide positives for the property
market is tourism,” said Dr Golding. According to the Chief
Executive, The King Shaka International Airport is regarded as
the country’s fastest growing international air gateway. It has
seen an 11% increase in international passengers’ numbers in
September 2019 compared to September of 2018. These are
a result of the introduction of direct flights between London
and Durban by British Airways. This trend has been adopted
by the City of Cape Town, which introduced a new direct flight
between New York in the USA and Cape Town. It is predicted
that the opening of this route will yield great tourism and
direct foreign investment results for the country.
“Tourism is recovering after the drought and aided by an
easing of visa restrictions and piloting of an electronic visa
application system coupled with increasing numbers of direct
flights, will bring more money, translating into economic
growth and jobs, and more prospective buyers to the country,”
Dr Andrew Golding said.
Dr Golding hopes that the economic growth of the country
strengthens in the year 2020, despite risks to the downside. “It
is possible that 2020 may see a somewhat improved market
than experienced the previous year,” He said. Supply is slowing
in response to weak demand, with fewer new houses and sellers
keeping or removing homes from the market. “Demand seems to
be slightly stronger, especially in the price band below R2 million,
so the market could edge back into equilibrium and then we will
start to see signs of an improvement in the market in 2020,” He said.
First-time home buyers
The emergence of younger property-buyers in the real
estate and property sector has shaped the demographics of
the industry for the better. The industry has seen the rise of
sectional title property ownerships which are largely owned
by younger homebuyers and owners. Lightstone properties
has revealed that the sectional title ownership is held mostly
by younger property owners between the ages of 30-39 years,
and has seen an average growth of about 11% in the year 2019.
“One of the factors we believe
could prove a boost for South
Africa’s economy and even
provide positives for the
property market is tourism.”
It is no doubt that young buyers remain a key positive for
South Africa’s housing market. “Developers are responding
with a marked shift in new housing stock towards sectional
SA Real Estate Investor Magazine FEBRUARY/MARCH 2020
13