Unpacking some trends which may shape the market going forward
Category Market Update
Coming from a quiet summer sales season, the residential property market remains on an unsteady footing, but has begun recovering to pre-pandemic levels. Like the economy, it is cyclical and subject to influences and trends which may impact and shape it. Some of these are:
Russia-Ukraine War - there is a risk to the oil price and inflation which could affect interest rates. We are already in a hiking cycle and the government expects the impact to be minimal.
Rising inflation and interest rates - inflation is now at 5.9% and near the top SARB range with little chance of a rate hike pause, but the rate is expected to remain below the pre-pandemic level.
Mortgage lending - the favourable lending has been a strong support for the market. FNB reported that loan values have increased which is further good news for our local market.
Resurgence and fifth wave of infections - There is talk of a potential fifth wave, which could hit in May and bring renewed lockdown restrictions, but will hopefully not have much of a dampening effect on the market.
Price growth trends - according to FNB price growth has slowed to under 4% as the market normalises which means that sellers will need to remain realistic with asking prices.
Emigration and semigration - while emigration may put more stock into the market, the renewed wave of semigration to the Cape should further support demand in the market.
Lifestyle shifts - more people are looking to move to areas with a safer lifestyle and better service delivery since the onset of the pandemic which remains positive for our market.
WFA and return to the office - getting back into the office should not affect our areas which will remain in demand for a variety of reasons including lifestyle, schools and convenient amenities.
Economy - although some industries including property have recovered and despite 4.9% growth in 2021, the economy is not yet back to pre-pandemic levels and continues to battle the pandemic, loadshedding and challenges such as the KZN riots and flooding.
That said, we do not anticipate any major economic shocks for the market and the outlook remains positive. It is always advisable to work with a credible and experienced local property practitioner to get the right advice for the local market.
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Author: Gina Meintjes
