Pre­dic­tions for the 2019 prop­erty mar­ket

George Herald - Private Property - - Property News -

2018 was a tu­mul­tuous year, from newly in­stated pres­i­dents to eco­nomic re­ces­sions, ever-ris­ing fuel costs, in­ter­est­ing IT rev­e­la­tions from Sars and a few more fi­nance min­is­ters. As we tear off the last page of our 2018 cal­en­dars, the ques­tion for real es­tate in­vestors as well as ev­ery­day cit­i­zens now be­comes: What awaits us in 2019?

"Not sur­pris­ingly, a lot will hinge around the out­come of the 2019 elec­tions," says re­gional di­rec­tor and CEO of RE/MAX of South­ern Africa, Adrian Goslett. "Lead­ing up to the elec­tions, I pre­dict that house price growth will be slow, some­where in low sin­gle digit num­bers, as peo­ple await to hear the re­sults be­fore mak­ing sig­nif­i­cant long-term in­vest­ment com­mit­ments.

“Prop­er­ties are likely, there­fore, to stay on the mar­ket some­what longer dur­ing the mar­ket­ing process for the first and sec­ond quar­ters of 2018, es­pe­cially those prop­er­ties in the high­end and lux­ury mar­ket. More­over, I pre­dict that there will be con­tin­ued move to smaller, more man­age­able prop­er­ties - such as sec­tional ti­tles, es­tate-style liv­ing, and lock-up-andgo type homes - as con­sumers con­tinue to feel the pinch of ris­ing in­fla­tion and cost of liv­ing. Sub­se­quently, I also pre­dict that there will be fewer cash sales and more bonded trans­ac­tions as the in­creased cost of liv­ing will ne­ces­si­tate higher loan-to-value amounts on prop­erty trans­ac­tions. Con­sid­er­ing that the MPC has al­luded to the pos­si­bil­ity of a se­ries of small in­ter­est rate in­creases through­out the year to counter in­fla­tion, it is there­fore likely that the mar­ket will con­tinue to favour buy­ers in 2019 as those who are un­able to af­ford the higher in­stal­ments on their home loans de­cide to put their prop­er­ties on the mar­ket."

Con­se­quently, Goslett says, the first half of 2019 will likely present the best op­por­tu­ni­ties to buy. "I an­tic­i­pate rein­vest­ment (both lo­cal and for­eign) in the coun­try post-elec­tion if the fight against cor­rup­tion con­tin­ues and tough de­ci­sions are made, which I do be­lieve will hap­pen. Greater sta­bil­ity should lead to con­sumer con­fi­dence and with that a more buoy­ant real es­tate mar­ket. I there­fore pre­dict that the mar­ket will turn a pos­i­tive cor­ner post­elec­tion, so if you wait too late to pur­chase, you may miss the up­side."

In or­der to bol­ster eco­nomic growth in gen­eral in 2019, Goslett rec­om­mends that gov­ern­ment should come up with cre­ative ways to en­cour­age all first-time buy­ers, re­gard­less of in­come clas­si­fi­ca­tion, to en­ter the mar­ket - by means of tax re­bates, for ex­am­ple. "Ris­ing house prices (which re­sult from an ac­tive prop­erty mar­ket filled with el­i­gi­ble buy­ers) en­cour­ages con­sumer spend­ing, which leads to higher eco­nomic growth. As a by-prod­uct of en­cour­ag­ing more South Africans into home-own­er­ship, a stim­u­lus or re­bate pol­icy of this sort could also re­sult in the growth of all kinds of economies and in­dus­tries that 'live off' the home, such as land­scap­ing, pool ser­vices, telecom­mu­ni­ca­tion, build­ing con­trac­tors, elec­tri­cians, plumb­ing and the likes," he ex­plains.

He strongly en­cour­ages gov­ern­ment to re-ex­am­ine their poli­cies around en­trepreneur­ship and do what­ever they can to help new busi­ness own­ers get to the point where they can grow their own busi­nesses and hire their own em­ploy­ees.

This, he says, can be achieved "by re­mov­ing some of the costly red tape in­volved in start­ing up a new com­pany. Do­ing so will in­evitably bol­ster the econ­omy, lower un­em­ploy­ment lev­els, and re­store in­vestor con­fi­dence in our na­tion".

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