HEIBERG ESTATES NEWSLETTER: AUGUST 2024

Dear Property Partners

Spring is in the air, let’s hope that September will also bring new life to our lethargic SA Property Market since the SA Reserve Bank (SARB) is widely expected to announce a long-awaited interest rate cut at its next meeting on 19 September 2024. There is all-round optimism that the SARB will relax its strict monetary policy and bring much-needed relief to consumers by beginning a downward interest rate cycle. For the past almost 3 years we have seen a succession of interest rate hikes as the SARB was focused on combatting our high inflation rate. Interest rates between 2015 and 2017 were between 9.5% and 10.25% and forecasts indicate that we might hopefully be heading back towards those lower levels again over the coming year or two.

SatsSA confirmed last week that our inflation declined to 4.6% in July, the lowest recorded since April 2021 and down from the 5.1% recorded in June, which indeed is within short reach of the SARB’s ideal 4.5% inflation rate before considering lowering the repo rate. A lower interest rate will have a positive ripple effect across all property sectors. It will stimulate consumer sentiment, affordability, and buyers’ interest to enter the Real Estate Market again as finance will be more accessible and become cheaper – whilst buy-to-let investors, will get better returns on their investments. Lately, lower fuel prices and our stronger Rand have contributed to the lower-than-expected inflation rate as recorded in July. The Rand strengthened year-on-year by 6.5%, and from the beginning of the year by more or less 4.8%.

Some of the latest statistics and interesting property-related facts:

• An estimated 14% of residential sales are semigration-related, whilst 22% of property sales account for older people downscaling to smaller homes or retirement villages.
• FNB reports that 21% of residential sales during the second quarter, were due to financial pressure illustrating the continuous financial strain that consumers face with our continued high interest rates. Interesting to note that data shows that people who need to sell, are scaling down and buying smaller homes rather than opting to rent.
• Statistics show that about 8% of homeowners sell their properties to emigrate – but still 10% lower than the 18% recorded in 2019.
• Standard Bank recently announced that 18% fewer home loans were approved during the first six months of this year in comparison to last year – further illustrating all-around downward pressure on households and affordability declining with the continued high interest rates.
• Betterbond recently reported that women are strengthening their position within the residential sector and have become key players in the SA Property Market. In our market of over 7 million residential properties, single women own 83 418 more homes than single men, and 56% of single female buyers in 2023, had been in the market before. It is stated that single women purchased 61% more freehold homes compared to sectional title properties between 2019 and 2024.
• Activities on the home front are still limited and all over South Africa it takes an average of 12 weeks and 2 days to sell a home in comparison to the 10 weeks and six days it took during the first quarter to sell. The longer-term average is 13 weeks. The Cape remains to be the star performer where the average time is 8 weeks.
• On the rental front a recently published Rode Report points out that Sectional Title property vacancies in SA are declining where at the beginning of this year it was recorded at 7.9% versus the 6.7% recorded during the last quarter. Once again the Cape is the star performer where Cape Town has a flat vacancy rate of only 2.9% and no flats at all available in Stellenbosch. In order to keep tenants, yearly rent escalations are kept to the bare minimum by landlords, and in Gauteng it was a mere 2%, whilst 4.4% in the Western Cape.
• The overall rental market has rebounded to its highest level since 2017. Rentals increased 5.2% year-on-year and beating inflation which was measured at 5.1% in June. The best performer once again is the Western Cape which had the highest rentals since 2016, and where this quarter, rentals increased by a whopping 9.7% year-on-year.
• Stats SA reports that homeowners residing in their properties declined from 64% in 2022 to 63% in 2023, whilst KZN shows the highest occupancy of homeowners of 75%.

Our economy remains fragile to worldwide geopolitical uncertainties and external shocks. Especially with the ongoing and escalating wars in the Middle East and Ukraine, and where the uncertainties surrounding the coming November elections in the USA, will also have an impact on worldwide economies and stability. Inevitably filtering down to our own economy and subsequently people’s willingness and ability – whether it is local or foreign – to invest in South African property.

The property cycle always turns, although the present low point has been extended much longer than what has been experienced in the past. With general conditions locally becoming more favourable, especially with the inflation rate declining and the rand making good gains against foreign currencies, we are optimistic that the Spring Season will also birth new life and movement into the South African Property Market. We are optimistic that things should really change for the better across all property sectors leading to the end of this year, especially since we do expect one of two interest rate cuts before then. The time to buy is sooner than later, supply is subsiding and with buyer demand increasing, prices might soon start moving upwards again!

Please do not hesitate to call us. Our Heiberg Estates Team is eagerly awaiting your call whether merely to touch base or to share combined more than 50 years of property experience with you. Kindy scan the QR-code to visit our website:

With best and warm regards.

Bambie and your Heiberg Estates Team