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What does 2019 hold for the property sector?

What happens in the property market is often a reflection of what’s happening in the country at large.
Uncertainty around land policy could majorly impact the property sector in 2019. Picture: Shutterstock

The factors that influence the performance of the property market are as numerous as there are fluctuations in the exchange rate. Still there are some definite trends that can be highlighted and that offer at least an indication of what the next year has in store for the industry.

What happens in the property market is often a reflection of what’s happening in the country at large – politically, economically and socially. Drawing on industry insights and expertise, Leapfrog says these are the big influences that we can expect to have an impact on the property market in 2019 in the political, economic, social and technological arena:

Political

An election year, which 2019 is, is always an interesting one for the property market. This is simply because elections signal uncertainty, which generally sees a reluctance by buyers to commit.

Uncertainty tends to evoke unease, and purchasing a property is a big decision (and investment), which needs to be coupled with confidence, which may seem elusive when the political future of a country is unclear.

The closer we get to the election the more obvious the general sentiment around the favourability of investments will become.

The other big political concern that has an acute impact on the property market is the question around land expropriation. There is definitely still some concern around this issue, which means buyers are cautious and sellers are sometimes over-eager.

There’s certainly a lot of uninformed hysteria being perpetuated, specifically on social media. At no point has government indicated that it would be pushing through a policy in which residential homes would be seized and any land reform measures would not be at the expense of the economy, national security and food production. Yes, there is a chance that certain categories of land could be expropriated but as far as residential property is concerned our message is that it’s business as usual.

Economic

With the country just recently emerging from a technical recession, market movements continue to be slow. “Currently we’re seeing residential property that is well priced because of a lower demand, which is good news for buyers while serious sellers will likely be forced to err on the side of conservative when it comes to establishing their selling price. 

Social 

It’s likely that the demand for property in sectional title and security estates will continue to grow in 2019. New sectional title units are often more affordable than freehold properties and thus an easier way to enter the property market. Security is always a concern and a property that offers a custom solution in this regard – like access-control, a 24-hour guard, security cameras and the like – remains an attractive option for potential buyers.

With major traffic congestion in most cities around the country, and the ever rising cost of transport, people are wanting to live as close to work as possible. “Suburbs close to big business hubs that also offer easy access to amenities like good schools and shopping malls continue to flourish. Some of these include Century City in Cape Town, Durban North and Midrand. 

Technological 

There’s no getting away from technology’s influence on the property sector. A variety of online tools and platforms that offer information, insights, analysis, cost comparisons and much more means that both buyers and sellers are more savvy, better informed and generally extremely on the ball. This is a wonderful thing for the property market because it keeps things competitive, transparent and cutting edge. 

This however doesn’t eliminate the need for a property agent or advisor. The role of a professional, trusted property advisor is, among other things, to deal with the often complex legal, financial and legal matters around buying, selling or letting a property, as well as advise clients on the value of a property relative to price. The technology simply helps people to do their homework around buying or selling a property, which tends to enhance the experience for both the client and the agent.

Bruce Swain is the CEO of Leapfrog Property Group.

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Another “property” guy trying to revive his industry. The truth is real estate agents have risen the property prices so high that they have eliminated 1st time buyers on a large scale. People have so much debt that the National Credit Act makes it prohibitive to even get a loan. SO much money has poured out of the country since 2012, the jobs, taxes and closing businesses have made less buyers willing to take that significant plunge. “If” we go to junk status, the interest rate will climb fast and hard. I remember 1999 when home bond interest rates were 18% – 19%. I do think they will go that high BUT they are going up.That puts already strained consumers in the thoughts of “Can I afford to take this LARGEST PAYMENT IN MY LIFE, and be able to handle it going forward.

In my nearly 50 years in SA I have never seen an article by an estate agent saying that now is a bad time to buy if you are a prospective buyer, or sell if you are a prospective seller.

I sold and bought my property in 1992 during the time that Mandela was freed. Economic sentiment was at an all time low. Many people were leaving the country and it was also a buyers market. Capital growth on the property is running at 9.6%. To rent a similar property today would be un-affordable. All in all a worthwhile investment.

In all fairness with regards to first 2 comments, the article is very neutral and only points out the facts. There are very little to be excited about and too much gloom to include everything in article. The bottom line is that we need to live somewhere if you remain in SA, and that in itself is major consideration. It does not matter how bad the political spectrum gets, capitals in even failed states like Angola and Zimbabwe indicated that there will be an increased demand for residential property in the right area when measured in stable currency

Reading all of the comments, are there any good real estate or property buying seminars to attend in Cape Town?, looking for some solid genuine advice from trustworthy reputable prospects.

Confirmation bias:
“Confirmation bias, also called confirmatory bias or myside bias, is the tendency to search for, interpret, favor, and recall information in a way that confirms one’s preexisting beliefs or hypotheses. It is a type of cognitive bias and a systematic error of inductive reasoning.”

Take one step back and ask yourself “what is the best, most cost effective, lowest-risk investment, with the highest potential to add value.”

We all need to live somewhere, but we not necessarily have to invest in a second property. The capital appreciation on residential property is a function of interest rates. If you believe interest rates are at the top of the cycle, then now is a good time to invest in property. It will be more cost-effective to buy listed property though, because the transaction cost is less than 10% of the cost of buying residential property, for the same exposure. If you want to use gearing, you can do so with listed property as well.

I own my house, but I do not invest in property because I believe that interest rates are on the rise and that The Satrix Nasdaq ETF or the Satrix SP500 ETF or many listed companies offer a rand hedge, protection against criminal politicians, better value and more potential for capital gains. You can buy all of these opportunities on gearing if that is what you want. People believe that you have to buy a residential property because the bank will lend you the money and you will make the profits. Well, the same amount of gearing is available on listed instruments as well.

There you go – the property buying seminar you were looking for – the online version, for free!. Without any confirmation bias. Is this solid and genuine advice? Is the source trustworthy and reputable? Well, you will have to make that call!

Hi Rob. Thank you for the link. I look at those graphs as part of my analysis at least weekly. I am a short term speculator because buy-and-hold is a high-risk endeavor in an environment of currency devaluation. Even Berkshire Hathaway that is seen by most to be the ultimate long-term investment, depends on currency devaluation for capital gains.

What we have to remember though, what goes for listed equity is also valid for residential property in the long term.

End of comments.

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