Property trends in South Africa for 2024

Our nation's growth and challenges are seemingly mirrored through the property industry through means of the trends and how those affect the industry and its users frequently. South Africa's property trends for 2024 are quite dynamic and very exciting for many! Below we take a closer look at a few of these trends that might directly impact you in the year 2024.

1. A cease in interest rate hikes.

Keeping an eye on the prime lending rate, which is the main rate set by the South African Reserve Bank (SARB), is important when applying for a home loan or when you still owe money on your current home loan. For the past year, interest rates in South Africa have remained quite elevated and at levels that have not been seen in the last 15 years, with the SARB implementing multiple rates increases to counteract inflation. Currently, it's widely believed that there won't be any interest rate increases in the near future. In September 2023, the South African Reserve Bank kept the interest rate unchanged, and they did the same in early 2024. So, as of April 2024, the interest rate remains at a 11.75%, the same as in May 2023. Investing now therefor seems to still be wise since it is very probable that the interest rate will stay the same for a while.

2. High home loan approval rates from banks.

The good news for home buyers in South Africa is that despite challenging economic conditions affecting the South African property market, banks continue to maintain high approval rates for home loans. They have remained competitive and for this reason, some individuals have received lower interest rates.

3. Increase in co-buying.

Co-buying can be described as buying real estate with others, like friends, family or even business partners. Co-buying also provides plenty of advantages for those involved, such as splitting financial responsibilities, affording a pricier property or having access to more funds. It is however very important that a clear agreement is established upfront to avoid any distasteful hurdles in the future. The agreement should include but not be limited to each individual's duties, rights and how they can leave the agreement should the need arise in the future.

The reason for the increase in 2024 is quite simple - currently, not many young individuals have the means to buy a property alone. Therefore, co-buying allows these individuals to purchase real estate and gain access to the property market.

4. Surge in buy-to-let.

Plenty of South Africans are moving from one place to another (semigrating) in search of better services, living conditions and infrastructure. This is taking place at a high rate in the Western Cape. Many of these new arrivals are renting while they look for a permanent home or while their own homes are being built. Another reality that adds to the surge in buy to let aspect is that the cost of living in Cape Town especially is slightly higher than in some other cities in South Africa. So, some individuals semigrating looking for the above-mentioned factors might not ever be able to afford their own homes and are required to rent.

Another reason is the return of tourists to Cape Town especially. Investors are snapping up properties so that they can rent them out as short-term leases and holiday accommodation.

Growing competition from both semigration and foreign investment, along with a shortage of available properties and soaring prices, has resulted in a rise in tenants in places such as the City Bowl, Atlantic Seaboard, and the Southern Suburbs of Cape Town.

5. Semigration.

The increase in remote work has led to a greater demand for larger homes in scenic areas, as well as the search for better services, living conditions and infrastructure. The Western Cape with its coastal regions and good municipal services, is a popular choice for those seeking a more peaceful and functional surroundings. For this reason, there has been an increase in semigration and this too will continue throughout the year.

6. First-time homebuyers prioritizing deposits.

South African homebuyers are increasingly making larger down payments, with some resorting to personal loans to fund them. While deposits offer advantages like better interest rates, using personal loans can harm credit scores and approval chances for home loans. However, recent trends show that deposits aren't always necessary for securing a home loan, as banks are willing to lend at high ratios even without one. The estimation is that this will carry on because first-time buyers are adamant about buying a home and entering the property market as soon as possible.

7. High pre-approval rates

Pre-approval rates have been on the increase and look promising to carry on with this trend throughout 2024. It is highly advised for individuals to get pre-approval. What this involves, is working with a lender you trust, who will work on how much you can afford. With this knowledge on hand, you will know what price range you qualify for before you start your house-hunting process. It is important to note that this does not guarantee bond approval If you are interested in pre-qualification from someone you can trust, contact our favorite bond originator:

Sunette Kriel

Cell: 084 679 6774 or
Email: bonds3@cmco.co.za

Stepping into the property market and buying a home is never easy, but knowledge with regards to what is happening in the market can be very beneficial.