Market for 2024 in The Parks and Surrounds
Category News
Market for 2024 in The Parks and Surrounds
2024 is poised to be an exciting year for home ownership. The past few years, were challenging, to say the least, but just as a tide turns, so too does the property market. Like a farmer coming out of a drought, someone embarking on a first date post a break-up, or a child taking its first steps it is done with cautious optimism, but as time ticks by and with the below unfolding, it will drive positive sentiment which will bring commitment and confidence to the market.
High impact factors that potentially lie ahead in 2024.
Interest rates are on the decline.
The signs are there for interest rates to start to decline from Q1 2024, and should continue to do so over the coming year and into 2025, leading to positive buyer sentiment bringing more buyers into the market.
Buyer sentiment has been negative over the past few years with interest rates having been on the rise, but we are expecting to see this turnaround over the coming year. In addition, affordability was a problem, as with high interest rates, buyers were either qualifying for lower bonds or not getting finance. Credit stress and unemployment, have been a real problem in the economy.
Adding to this we should start seeing more investor buyers coming back into the market as finance will be cheaper allowing for better returns.
First-time home buyers.
With interest rates easing it will allow many hesitant first-time buyers to be able to afford to buy properties, whilst gaining the confidence to buy rather than renting properties. Many of these buyers have been holding off on taking the big step into home ownership which has had a detrimental impact on demand and negatively impacting the pricing of sectional title units in particular. As the interest rates decline, we expect to see many new buyers committing to purchasing new homes.
Geopolitical situation.
With the world in turmoil, South Africa's issues are less of a deterrent than in previous years - The emigration and semigration movements have slowed down, and we are seeing a very real reversal to this, with many buyers moving back to South Africa.
With Johannesburg being the financial hub of the country, we provide the most work opportunities. This trend will continue to pick up with many corporates calling their employees back to the office, even if it is a hybrid working environment. The areas around Rosebank in particular, are in demand being located close to the ever-expanding Rosebank Business node, as well as being close to many top schools both private and public, hospitals, and major transport routes including the Gautrain and major highways. New entrants into the job market will have a positive spin-off for investment buyers as demand for rentals should also start to increase, by providing decent yields which have not been seen for the past few years.
South African Elections are the big talking point.
Whilst one cannot predict the outcome of this with any great certainty, given all the variables associated with an election but the one certainty we do have is that the support for the ruling party (ANC) has been on the decline and early indicators point to this being the case in the 2024 National election brining them to under the 50% mark. It sends a strong warning to them - either shape up or ship out. The nuances around coalitions are very complex and do have various implications. The one certainty is that there is a real desire from voters and the private sector to see positive change across the board from those at the helm. Time will tell but there is great optimism around the future of this amazing country and city.
Infrastructure and costs associated with this.
Many suburbs are going through the short-term pain for the long-term gain, with infrastructure upgrades taking place. New water pipes, sewer lines, potholes repairs, and electrical substations have been, and continue to be installed. We would all like any form of outage to be a thing of the past, but this will unfortunately not happen overnight. With elections around the corner, we historically have seen more being done in the name of service delivery, just before the actual elections. South Africans are resilient, and always make a plan. The private sector has also stepped up, including initiatives such as the 'Pothole Patrol', CAP, and 24/7 being examples of this. Further to this, most homeowners have taken it further with installing solar/backup power solutions, boreholes, and water storage tanks including rainwater harvesting, thus reducing their reliance on municipal services while in turn increasing their use and enjoyment of their homes, as well as value.
Reducing reliance on the grid has its costs but it has its benefits too, including reducing your monthly municipal bills as well as your carbon footprint. The cost of these initiatives is also less than one may think as competition from service providers has brought prices down as well as offering numerous financing options.
This is of course not first prize, but Joburg is not the only city in the world facing issues such as the above and it is a small price one pays to live here, but I would far rather be here than anywhere else in the world. The grass may seem greener but there is no utopia anywhere in the world.
Stock levels are on the decline.
The number of listings has declined by 12% in The Parks and surrounds, with Parktown North in particular coming down 22% over the past 6 months. Looking at market trends from 2015-2017 (the height of the market over the past decade), we experienced a 'sellers market' where demand outweighed supply. As stock levels slow, it bodes well for property prices as we move into 2024 with supply subsiding and buyer demand increasing.
Another notable point, is that interest rates in 2015-2017 were between 9,5% - 10,25% and forecasts indicate that we are heading towards these levels over the coming years.
There is a lot that still needs to happen before we see a complete shift from a 'buyers' to a 'sellers' market but the indications are pointing in this direction which is very good news indeed.
Value for money and quality of life.
Johannesburg's property prices are currently at a very affordable level (well below prices seen at the peek) offering great value for money and a lifestyle that is not easily replicated anywhere in the world. The Parks and surrounds offer a great lifestyle at affordable levels making them very desirable for anyone looking to buy in Johannesburg. Many suburbs have also introduced numerous community and security initiatives including booms, AI cameras, street guards and general public space patrols making these suburbs safer in turn increasing the desirability to live here.
Further to this most suburbs have a very active community/resident participation, with formal residents associations in place, making the suburbs safer, cleaner, and more inclusive (yes, people in Joburg are friendly and actually talk to their neighbours) with Forest Town and Parkview being great examples of this.
Further to this, we see street WhatsApp groups, monthly newsletters, and fun family activities taking place across the suburbs. The property cycle always turns, and the market has been on the downturn for some time, with 2024 being the year when we expect to see it turn for the better.
IN SUMMARY.
We expect 2024, to bring about far more positivity in the property market across both the freehold and sectional title segments. The time to buy is sooner rather than later as property prices will start to climb as stock levels dry up, interest rates come down, and new and returning buyers enter the market.
Those that are prepared to take the leap before the rest follow, will reap the rewards of being the early movers and as the saying goes, 'the early bird catches the worm'.
For buyers, it is key to get your ducks in a row with getting pre-qualified for a bond and to get your transfer costs together so that when the right home comes to market you are ready to strike.
For more information contact The Parks agents.
Lloyd Hobson 065 170 6564
Byron Thomas 076 987 9659
Author: Byron Thomas Properties
