HEIBERG ESTATES NEWSLETTER: MARCH 2025

Dear Property Partners

In spite of the latest SA Reserve Bank (SARB) announcement that the repo rate is not going to be reduced after the respective .25% reductions in September, November and January, the near-term future of our property market will hopefully remain resilient with activities that picked up moderately over the last six months, to be continued for the foreseeable future.

Considering that our inflation rate remained the same at 3.2% as also recorded during January and February, this coupled with President Trump’s trade wars as well as taking into account continued high worldwide economic and political uncertainties, these realities could have been important factors contributing to this latest SARB decision. Hopefully, we will not lose the advantages that AGOA  brings to our economy as if it is going to be changed, exports will decline, our rand value against foreign currencies will take a knock, inflation will increase and with it – a decline in economic growth and sustainable job creation. The SARB already lowered its economic forecast for this year from 1.8% to 1.7% whilst it left its forecast for 2026 and 2027 the same at 1.8% and 2%.

Fortunately, there was some good news in the 2025 Budget after the initial delay. The good news Is that the transfer duty threshold was increased by 10% from R1.1 million to R1.21 million which will bring some relief to especially first-time buyers as the average house price in this buyer segment is between R1.2m and R1.3m. Up to R1 21 million no transfer duty is payable Also positive the fact that there have been no adjustments to property gains tax, dividend tax and estate duties which will benefit property owners in their estate planning and investment planning. Also positive was the re-affirmed Government commitment to infrastructure investment where sound and continued investments promote economic growth, creates more sustainable employment and enable people to buy property.

VAT that has not been increased since 2018, but is now expected to be increased by 0.5% to 15.5% from 1 May 2025. This will inevitably lead to an expected 0.2% increase in our inflation rate and will have a direct impact on our Real Estate Market, especially on escalating wide-ranged building- and service delivery costs for developers and purchasers of newly built units, where VAT is incorporated in the purchase price of new developments. So also in the supply of monthly Municipal services, day-to-day living costs, fuel- and food prices, just to name a few. This in turn could boost the rental market where especially in the lower price ranges, people might continue rather to rent than to buy whilst they are navigating the changing economic environment. The Real Estate Market makes a huge contribution to our tax base and with potential further declines later this year in sale volumes, this could also have a huge and negative impact on our already almost depleted state coffers.

Some of the latest interesting facts and statistics:

• Land grabs – interesting to note that although with the latest escalating uncertainties surrounding the Land Expropriation Act, forcing foreigners now to think very carefully before they buy property in South Africa, many countries already have some “peace-of-mind” agreement with our Government in place. If for example a Mauritian buy property in SA, our Government can’t just lay its hands on it – the same applies to all countries with whom SA has made similar agreements.
• Statistics SA reports that the total number of residential plans approved, declined by 10.6% last year, whilst building activities in the Western Cape gained momentum where the percentage of plans approved increased by 5.2% – once again illustrating how popular the Western Cape remains to be!
• The ABSA Homeowners Sentiment Index recorded the highest level of consumer confidence in a decade in our future residential property market with an increase of 87% where consumers are regarding property as a good investment. This also shows the resilience of SA consumers in spite of the burden of protracted costs of living.
• Optimism to keep and renovate owned property, rose by 3% to 82% to safeguard future value of their properties.
• FNB reports that mortgage lending conditions have shown some modest improvement, with the average loan-to-value ratio, derived from 95.1% in the last quarter of 2024, up from 95% recorded in the 3^rd quarter 2024 and 94.7% recorded during the 2^nd quarter 2024, further illustrating some buyers optimism.
• First-time buyers are expected to remain to be the main drivers of market activity and ABSA recorded that they account for more than 53% of all property registrations.
• BetterBond reports that over the past year, there has been a positive growth in successful bond applications granted and with a 7.5% year-on-year increase in home loan applications. Building loan applications also showed a positive 5% increase over the past 12 months, all positive signs towards a gradual rebound in our property market – may it be sustained! Bonds for homes below R1m represented 42% for all home loans awarded.
• BettterBond furthermore reports average home price increases year-on-year of 4.7% – also as such reported by the FNB House Price Index, showing the highest growth since 2023, and clearly illustrating gradual improving buyer sentiment.
• With increased demand, it results in shorter selling times where homes are on the market for an average of 11 weeks on the market, whilst homes in the R2.6m to R3.6m price range sell in a shorter time.
• Buy-to-let activity also showed some positive growth and increasing from 8% to 12%, whilst affordable housing is the key driver for investor buyers. Investors realize the increased and ongoing affordability-driven demand for rental properties, especially in the more affordable and lower price segments.
• Ooba reports that the modest recovery in national house prices continued last month with the average house price paid was R1.6m in February – an increase of 1.3%, whilst the average price paid by first-time buyers, was R1.21m.
• The average age of a home buyer is now 36 years, whilst the trend to buy property with a second party has increased to 18% last year – this illustrating the ever-challenging economic climate.

We remain to be very positive about our Pretoria Real Estate Market. Interesting to note that increasingly property owners who over the past eight years or so semi-grated to the Western Cape, are returning to Johannesburg and Pretoria where there is economic momentum and more extensive business opportunities. After Covid, many companies have revoked their work-from-home policies and are requiring their employees to be back at the office, especially in the Johannesburg region where career progression and high-level networking are centered. With a high presence of our country’s Corporate Headquarters located in the Johannesburg, Sandton and Pretoria areas, hybrid and in-office work models are becoming reality again. Johannesburg remains to be our commercial powerhouse and contributes to 16% of our country’s GDP whilst according to StatsSA, the city accounts for 40% of business services output in SA. Many property owners choose to rather commute and stay in Pretoria with its wonderful lifestyle, excellent and more affordable property investment opportunities and good schools, universities, shopping centres and hospitals. Heiberg Estates agents are privileged and excited to assist all returning “expats” – welcome back home!

We all are aware that property will remain a valuable asset in everybody’s investment portfolio, especially if one keep focus on the longer term plans and goals rather than being concerned about the immediate future which is clouded with uncertainties on both economic and political frontiers as the comfort zone of a stable world order, has been shattered on several occasions over the past few years and with geopolitical tensions on the increase. Amidst global turmoil, may our fragile economy not be exposed to a second wave of inflation led by in part, by a resurgence in global food and fuel prices.

Whilst we all are facing the escalating cost of living, the aspiration for home ownership will always be on the horizon in all price segments of our SA Property Market. 92% of all South Africans belief that all should have the right to own a property and is much more than the worldwide average of 78%. With our high unemployment, continued high interest rates and a general fragile economic state of affairs, unfortunately only 38% have the hope that homeownership might become a reality.

Please contact your Heiberg Estates Team that remains to be on 24/7 standby for any property related needs or questions. As always it will be an honour and privilege for our team to share more than 50 years of collective property expertise with you! Also visit our website at www.heibergestates.com for our latest listings, or scan the QR-code below:

With best and warm wishes.

Your sincerely

Bambie & Heiberg Estates Team.