An Upturn in the Residential Market: Finally upon us
Category Blog
For years, residential property prices outside of the Western Cape and select coastal areas have been subjected to relentless downward pressure, dating back to the 2008 financial crisis. Yet, at last, a range of indicators suggests a potential shift in sentiment, possibly setting the stage for the strongest recovery since the 2001-2008 boom. While the turnaround is starting to happen, there are signs that home prices could begin to outpace inflation by mid-2025. The Bureau for Economic Research (BER) at Stellenbosch University projects GDP growth of 2.2% by 2025, well above the 1% annual average of the past 15 years.
Nowhere is the pricing dynamic more apparent than in Johannesburg and Sandton, where inflation-adjusted home prices are the most affordable they have been in three decades.
Several factors underpin this potential recovery:
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Monetary Policy: Interest rates are expected to decline as early as September.
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Political Stability: Improvements in political governance and stability have fostered renewed optimism.
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Currency Strength: A stronger rand is helping to ease inflationary pressures, improving both investor and consumer sentiment.
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Foreign Investment: The stock market continues to break records, buoyed by a surge in foreign capital.
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Energy Reliability: The recent absence of load shedding has been a significant relief to businesses and households alike.
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Virtuous Cycle: The BER notes a "virtuous cycle" emerging, with economic improvements feeding on themselves.
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Infrastructure Improvement: Ongoing efforts to alleviate rail and port disruptions are bearing fruit.
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Tourism Boom: As the summer months approach, the tourism sector is poised for robust growth.
Historically, the market's shift often occurs months before it becomes widely recognized. Today, most property practitioners and buyers sense that the market is already in the early stages of recovery.
Author: Ronald Ennik
