Pockets of Opportunity in 2024 – Property Market Trends
What can homeowners and homebuyers expect from the housing market in 2024.
30/11/2023
It's time to look ahead to 2024 and what can home sellers and buyers can expect from the housing property market in the new year, particularly with geopolitical tensions and inflationary pressures rising as this year draws to a close. Here are some of the top trends BetterBond will be keeping an eye on:
1. Interest rates
The recent interest rate hikes have impacted home buyers’ home loan affordability. Even if rates hold steady for a few months, before hopefully coming down early in 2024, it’s likely that home buying will remain subdued for a while. However, pockets of opportunity to meet buyers’ needs remain across the country. “Research undertaken by BetterBond data indicates that average home purchase prices have remained almost unchanged year on year, so any positive shifts in interest rates could spark activity in the housing market,” says Bendall.
2. First-time buyers
In 2024, this important buyer segment, will still be able to find some comparatively affordable options in new residential developments in the inland provinces of the Free State, Mpumalanga and Limpopo. “Data from BetterBond reveals that, despite price increases, first-time buyers have managed to retain a share of more than 60% of all home loan applications for the past two years, and this positive statistic is likely to be carried forward into 2024,” says Bendall. The top three areas in terms of average home loan values granted to first-time buyers, over the past 12 months, have been the Western Cape, Greater Pretoria and Mpumalanga.
3. Small towns
South Africa is famous for its charismatic small towns and many of these have become highly sought-after places to live since the pandemic, with more of us now able to do hybrid or remote work. “Small towns along the coast, formerly thought of solely as holiday destinations or retirement towns, have become desirable locations for primary residences. Here, we are thinking of places like Hermanus, Mossel Bay, Langebaan,” says Bendall. According to Lightstone, 26% of buyers semigrating in 2023 chose to settle in smaller towns for the laid-back lifestyles and superior service delivery on offer in these locations.
4. Coastal living
Lightstone reports that the
Western Cape remains the preferred destination
for semigrants, with 59% of housing sales in the
region attributed to buyers from Gauteng.
According to StatsSA, just over 80% of the value
of residential building plans passed in 2022
were for the Western Cape, KwaZulu-Natal and
Gauteng. With its pristine beaches, natural
beauty, efficient service delivery and quality
of life, the Western Cape continues to attract
buyers from inland provinces.
However,
its fellow coastal provinces of the Eastern Cape
and KwaZulu-Natal are also gaining popularity as
semigration remains a major driver of the South
African residential property market. The Eastern
Cape recorded the second-highest house price
growth year-on-year, according to the September
2023 BetterBond Property Brief, largely on the
back of significant semigration. In the same
month, KZN was the top-performing BetterBond
region, suggesting that coastal living continues
to drive home buying along the coast.
5. Space for WFH
With hybrid work and work from home (WFH) becoming the norm in many sectors, we will continue to see demand for homes that have enough space for a home office. “In addition, we expect to see homeowners taking out more building loans in the new year, to renovate their existing homes to accommodate the work-from-home option, also increasing their property value in the process,” says Bendall.
6. Mixed use, with a modern twist
The
“live, work, play” value proposition is not new
when it comes to residential property sales, but
what we are seeing is the expansion of the
mixed-use concept to encompass even more than
before. Commercial buildings in central business
precincts are being repurposed for residential
use. In the Cape Town CBD, for example, the old
Standard Bank building on Thibault Square has
been converted into a space that now includes an
aparthotel and Airbnb-style accommodation as
well as a residential section. In Johannesburg,
developers continue to buy the oversupply of
office space and redevelop them for either
residential or mixed use. In Sunninghill, for
example, an office park has been converted into
stylish designer-style apartments in a luxury
development called The Apollo.
“We expect
increased demand for this modern way of communal
living where a property offers a sense of
community to residents from many different
backgrounds, and the convenience of an array of
lifestyle options in a single location,” says
Bendall. Westown in Durban is a residential
precinct with lifestyle and recreational
components. Residents can choose from a range of
property options, and enjoy easy access to
medical facilities and retail spaces.
7. Collective buying
As economic challenges
persist, expect to see more collective home
buying. Many South Africans are already sharing
homes and family responsibilities with parents
or siblings sharing living spaces and household
expenses. According to StatsSA data, in 2020
already, just over 45% of households were double
generational – parents and children living
together – while almost 15% housed three
generations in one home.
Collective
saving schemes, ‘stokvels’, offer an
increasingly popular way to buy property. Some
of South Africa’s big banks have launched
collective buying home loans that allow up to 12
people to buy together, with each person
contributing towards the monthly instalment.
“While interest rates remain high, we expect to
see more stokvel activity next year as South
Africans continue to prioritise home buying as a
way of securing their financial futures,” says
Bendall.