Better days ahead? Experts predict ‘slow recovery’ in SA real estate

SA Home Loans (SAHL) predicts better days ahead for SA’s property market in 2024, anticipating a slow recovery rather than a bounce back.

Rising living costs and record high inflation have discouraged potential buyers from purchasing their dream home, while making it difficult for property owners to afford mortgage loan repayments.

“In 2023, we saw a sharp fall in property and mortgage transactions, which were down in the region of 25% year on year, with the most strain evident in the heart of the market – those segments under R3 million,” said SAHL CEO Rob Kelso.

“This is despite an environment where the credit supply side or bank appetite remained robust,” he added.

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Forced to pause

High interest rates have stifled consumer appetite for home loans, forcing most potential buyers to pause their purchase plans.

Echoing, Keslo said the interest cycle had been a dominant factor with the most significant tightening cycle in more than a decade, alongside a rapid rise in interest rates in more than two decades.

“This has resulted in strained affordability for new buyers and strained affordability for existing borrowers, with rising arrears on credit portfolios across the industry,” he explained.

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Light at the end of the tunnel?

SAHL anticipates the market would improve when interest rates stabilise, accompanied by a return in consumer confidence.

Despite economic uncertainties posed by the upcoming elections, load shedding and geopolitical factors, SAHL believes the economic signals for 2024 were increasingly positive.

“Notably, the consumer price index (CPI) has moderated, and interest rates have likely peaked, and the consensus is for a round of steady, moderate rate cuts from mid-year,” Keslo said.

He explained the changes would provide relief for consumers, with improved affordability and increasing confidence to access credit.

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Lenders are still willing

When it comes to willingness of mortgage providers to finance home loans, Kelso said lender appetite would remain robust into the year, providing a strong base for market recovery.

“We are seeing the traditional bank lenders active and competitive in the market, as well as new entrants to the home loan market, in line with the emergence of new banks and the diversification of existing banks,” he noted.

“Their presence is likely to continue to grow in prominence moving forward,” he added.

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