HEIBERG ESTATES NEWSLETTER: NOVEMBER 2023

Dear Property Partners

I think most of us are finding it unbelievable that we are busy wrapping up all loose ends where time has flown in this rollercoaster of a year. There have been many challenges on so many fronts throughout our vulnerable economic state of affairs, especially looking at the rather fragile SA Property Market. In spite of downward pressure over the whole property spectrum regarding declining property prices and sale volumes, the market still remained resilient whilst clever investors used the opportunity to buy well in this Buyer’s market. Excellent property investment opportunities presented themselves over the past year, where there were more properties for sale on the market than Buyers. Buyers used this scenario to shop by comparison and to negotiate excellent investment deals, where many Sellers were forced to sell at lower prices due to the high interest rates and lessening affordability to service their bonds and monthly repayments.

The latest announcement by the SA Reserve Bank on 21 November that it is not increasing the interest rate, was widely applauded in relief but it is not taken as a given that it will not be increased in 2024, subject to our inflation rate and other wide range economic factors. As we are all looking forward to a good and positive start to the new year and looking at prospects for 2024 in general, we have reason to believe that further SA Reserve Bank interest rate hikes are unlikely – also taking into account that the elections are coming. The fact that the present interest rate was not increased this month is a positive sign for more movement in the property market to come. There is a reason for optimism that if our inflation rate can be kept at bay at the lower end of the SARB band of between 3% to 6% next year, the prospects should be good for the SARB to start cutting the interest rates to stimulate our slow-moving economy, also in the bid to create more sustainable jobs which is a huge challenge at this present point of time.

Some of the latest interesting facts and statistics:

• The impact of economic and other challenges over a broad front, is very visible in our residential rental market where interest in the higher rental niche market is visibly showing down, coupled with more people getting behind in their monthly rental payments. Only 1,2% of all people in our rental market, are renting properties above R25 000 and 11.6% of them are late in their monthly payments. Rental properties are most popular between R12 000 and R25 000 per month. Looking at the third quarter, an average of 83% of tenants managed to pay their rentals on time.
• Interesting to note that rental increase amounts are not keeping up with our inflation rate where a rental increase of 4.8% was recorded during the third quarter versus our inflation rate of 5.4% recorded in September. The increasing rental vacation rate in Gauteng was recorded at 6.9% versus the 6.56% recorded in the Western Cape.
• Redefine one of South Africa’s biggest commercial property owners, also recorded a declining occupation rate this year where 93.6% of its properties were occupied versus the 95.6% recorded last year and they also reported a slight decline in industrial space occupation.
• Looking at Office Space in South Africa has been the worst-performing commercial sector over the past few years, Rode & Partners report that it remains to be the top performer in Cape Town where during the third quarter rent escalations of 12% were recorded, being way above our inflation rate. Looking at the national average nominal rentals increased by 2.8% in comparison to last year, whilst in areas like Sandton, Rosebank, and Menlyn, office rentals declined by 6.8% to 11.6% in comparison to a year ago.
• High interest rates, our lethargic economy, unemployment, escalating living costs, etc. contributed to the residential sector remaining to be under downward price pressure. A recent FNB Report points out that residential property prices in August were a mere 0.8% higher than last year and due to financial stress, whilst 23% of properties sold during the third quarter were forced sales.
• A clear indicator of the lower demand for properties, can be seen through the decline in the worth of approved bond applications where the Reserve Bank noted that it declined by 25% during the second quarter versus a year ago.
• A further indicator of downward pressure on the residential property sector, is the average of 11.4 weeks it took to sell a property during the first nine months of this year, versus the 9.3 weeks recorded during 2022 – basically two weeks longer and this time is visibly increasing due to lower demand.
• Due to a huge oversupply in all property sectors where more properties are available than Buyers, we experience ongoing downward pressure on property prices as well as on sale volumes. With our continued high interest and inflation rate, this scenario is most likely to continue for some time into 2024.
• Looking at sectional title 6.9% of flats were recorded unoccupied during the third quarter, whilst the Western Cape recorded the lowest vacancy rate of 2.9%. There is concern in this segment where the national average of tenants getting behind in their monthly payments, has been recorded at 18.4%.

Looking back over the past 11 months, we all at Heiberg Estates can’t but be extremely grateful to each and every one of you – our loyal Property Partners and Colleagues, and so many others that we deeply value and cherish. Without you, all would basically come to a standstill and in spite of an all-around challenging year, Heiberg Estates continued to have another excellent year – for which we sincerely thank you.

We are optimistic that there is only room for improvement in 2024 and please be assured that your Heiberg Estates Team members are all focused to enter the New Year with renewed energy and determination to be at your side, to address all your property needs whether you want to sell, buy or rent. We are here 24/7 at your beck-and-call! Please never hesitate to contact us! Please scan the QR-code to visit our website:

Our very best and blessed Festive Season and New Year wishes.

Your Bambie & Heiberg Estates Team