HOD's property forecast for 2023 - what you need to know.
Category News
Despite fears of the increased cost of living and ongoing national concerns such as interest rates plaguing homeowners, the property market remains stable and resilient. Home loan approvals remained high in 2022 and are forecasted to continue throughout 2023 as major financial institutions offer favourable conditions to potential homeowners.
According to a recent report by Ooba Group's chairman, this can be attributed to a more sustainable 25-year average on interest rates. Despite 2022 closing at a prime rate of 10.5%, banks are competing to offer approvals on attractive terms and at 100% of the purchase price. Investors should take note of the following factors to make the most out of their existing and potential assets.
Types of property on demand
While many of us are returning to the office space, working from home is a major deciding factor when looking for potential areas to live in. With more freedom in terms of lifestyle choices, outlying suburbs of significant city hubs such as Johannesburg and Cape Town are increasing in popularity.
Also referred to as peri-urban or semi-rural, the rise in demand within these areas, as well as within major metropolitan areas, may be attributed to a perfect storm in terms of a wide range of available properties on offer, as well as an increased scope of potential homeowners driving the ever-persistent buyer's market. Banks are fully aware of this and are taking advantage of a more liberal approach to home loans.
Affordability drives the current landscape
While the property market continues to showcase its resilience, homeowners must practice caution and do their due diligence. It's essential that during times of global economic downturn, potential buyers stay within their budgets. The buyer's market may offer attractive properties outside one's affordability range.
Even the slightest movement in interest rates may significantly affect bond repayments. Thus, prudence and patience are advised. To stem the tide against increased bond repayments, investing in development property may also be a sound direction so it's essential to speak to your property practitioner to find adequate opportunities for economic security and the solidification of future wealth.
With fewer buyers, sellers must be more realistic about pricing and remain open to negotiation. A proper property and area analysis will help sellers set their prices to elevate property interest. Serious offers from serious buyers should be considered as pricing increases do not seem likely in the foreseeable future.
The buy-to-let market forecast
On a more positive note, investment property is making gains in 2023, with more buyers seeing valuable returns as South Africans opt to rent over buy. The demand for buy-to-let property has increased by an overall 30% year on year.
According to the latest Property Index figures, this trend is most notable in Johannesburg and the Western Cape as investors are looking to 'cash in' on higher demands for rental property. This trend is forecast to continue throughout 2023.
If you want to buy or sell your home, contact one of our Real Estate Property Practitioners follow the link: https://www.homesofdistinction.co.za/agents/
Homes of Distinction CC holds a Fidelity Fund Certificate issued by the Property Practitioners Regulatory Authority.
Author: Bryce Anderson
