2018 a buyer’s market for property industry

The property market has shifted notably over the last 18 months as the fall-out from the weak political and economic climate, poor growth and credit downgrades continue. The inevitable result, according to Samuel Seeff, Chairman of the Seeff Property Group, is that this rather good performing economic sector, is now also taking strain.
“Where it was a sellers’ market until early 2016, we have seen a progressive shift in 2017 which has manifested in lower demand, rising stock levels combined with a decline in buyer confidence, flat price growth and deals taking longer to conclude. The outcome is that we head into 2018 with a buyer’s market for most areas,” Seeff said.
Of concern, he added, is that there is still a lag on the sellers’ side of the equation with price expectations out of step with the market. The result is an overall weaker market with low levels of liquidity that now favours buyers in most areas, he added.
Overall, the market is down by about 15% to 20% from the 2015-highs. “Yet, we operated in 2017 with slightly improved fundamentals compared to 2016, being a lower repo rate (6.75% vs 7% in 2016) and slower inflation (5.3% vs 6.5% in 2016). Even the stand-out Cape is beginning to slow down although it continues to benefit from a broad base of demand such as the constant flow of semigrating buyers from other areas, investment and holiday demand,” Seeff said.
He noted that the reported slow-down in semigration is also attributable to the slow rate of sales in other provinces combined with the high prices in the Cape which has now put a dampener on this market.
The mid-market below R2 million remains the most active, but very susceptible to financial strain. The upper end, despite being able to better absorb economic fluctuations, has seen a notable slow-down in the Gauteng market above R5 million and in the Cape above R8 million and above R18 million on the Atlantic Seaboard. The holiday and investment market has also slowed as an inevitable fall-out from the weak confidence levels.
Seeff added that the Finance Minister Malusi Gigaba painted a subdued outlook in his recent mini budget and we are in for a tough economy and property market in 2018. While by no means gloom and doom, it is a period of prudence ahead for property, according to Seeff.
History has shown South African property to be a good investment with growth rates that generally outpace inflation during a positive economic phase as we have seen over the last few years. Property remains a good investment, especially if it is your primary home. Seeff reiterated that there is nothing more important than owning the roof over your head as it provides stability and a base upon which to build a life and wealth.
Regardless of the state of the economy, Seeff said there will always be people who need to buy or sell for a variety of reasons and there is opportunity in every market. Every economy and property market goes through cycles and it is always best to take a long-term view, he concluded.