Looking back, 2022 was an exciting year for real estate. Semigration, multi-generational living, remote working, downscaling, and the rise of young buyers made for a vibrant property market. What's on the cards in 2023? Plenty! Harry Nicolaides, CEO at Century 21 South Africa, has looked into the crystal ball and offers his expert predictions and advice for the year ahead.
Outlook for the local property market
According to Nicolaides, adverse global economic indicators together with commentary on their effects on business from industry leaders across all spectrums suggest that 2023 is going to be a challenging year. In fact, most predict some scale of a recessionary environment.
"South Africa is not immune to this global outlook," points out Nicolaides. "Compounding this challenge for us is the dire state of South Africa's electricity supply and serious shortfall of national infrastructure maintenance and development."
"Ironically, however, financial markets and stock indices have shown impressive gains at the start of 2023 and even our own JSE hit record high levels. This has confounded business commentators who now believe that a possible recession will be mild and only appear in the first half of 2023. They believe that global energy needs thrown into turmoil due to the Ukraine/Russia war have been mitigated somewhat by those countries most affected by the constrained supply since the start of the war and inflationary levels have already peaked in most countries.
"The property market is always directly affected by rising interest rates and again we are not immune to this in South Africa. However, there is a wonderful 'yin & yang' characteristic at play in the property sales chain and that is as interest rates go up, which affects affordability, the price of homes drops accordingly due to oversupply and eventually, over a six months period, the net effect of higher interest rates is somewhat negated. The result of all this is that buyers can then still afford their dream homes and the same applies for the sellers who buy elsewhere."
Trends shaping residential property sales
The profound trends in our South African market over the last few years will continue and perhaps be even more apparent, says Nicolaides. "These are that first-time buyers are the most active in the market, that sectional title schemes remain the most popular segment in the industry and, more recently, buyers are carefully considering which metros and municipalities to invest in as more and more municipalities falter on service delivery with respect to infrastructure maintenance and basic utility supply."
- Advice for property buyers: Nicolaides says there is and never will be the perfect time to buy a home no matter the economic cycle at that point in time. "In each instance when a decision must be made, there is a unique set of macro-economic circumstances beyond our control so all that is needed is to ensure the affordability of the home at that point in time and allowing some reserve in the budget in case of cost increases mainly with respect to the interest rates."
- Advice for property sellers: For sellers, if it is not their intention to sell their property at any point in time, they should compromise perhaps a bit on lifestyle and do what they can to hold onto their home, encourages Nicolaides. "This is simply because the property market goes through many cycles, both up and down and over our lifetimes but ultimately, over the medium to long term, property prices will always trend upwards, so compromising on lifestyle to keep your home is always worth it."
Trends shaping residential property rentals
The letting and renting of residential property is influenced by the exact same factors as the buying and selling of homes and therefore the same applies, says Nicolaides. "Certainly though, the biggest demand from tenants in South Africa is for well-positioned sectional title homes which offer smaller and thus more affordable units, tidy and properly managed complexes, and security."
- Advice for renters and landlords: Nicolaides says it is imperative for renters and landlords to appoint and use the services of qualified and legally registered property practitioners at all times and to choose a practitioner that has updated and sophisticated tools and systems to conduct their services to them. "There is no doubt that the role of a real estate professional is essential over the period of a lease for both the landlord and the tenant and this is mainly to ensure a cordial and professional relationship at all times and to assist in resolving disputes if and when they arise."
Navigate 2023 with Century 21 South Africa
When it comes to overcoming 2023's curveballs, Nicolaides says Century 21 South Africa's SMARTER. BOLDER. FASTER.™ property professionals are the ones to turn to.
"A priority feature of Century 21 South Africa is that its practitioners are relentlessly and continually updated and trained on property trends and valuations, mortgage bond rates and offers, and property law," he says. "They are at the cutting edge of technology with respect to the marketing of homes. Century 21 South Africa also draws on its family of 18 000 offices and 150 000 estate agents across 86 countries around the globe for its knowledge, trends, and systems best suited to serve its clients."