There is still reason to be optimistic for the Western Cape property market in 2023, despite interest rate hikes. While the cost of mortgages will increase moving into next year, Samuel Seeff, chairman of the Seeff Property Group, claims that our local property market has outperformed the global market and remains relatively healthy.
The South African property market is unlikely to see any dramatic price adjustments compared to the 30% to 40% appreciation the global market is experiencing. Our interest rate is still below the 20-year average, despite the spike it has suffered since the Covid-19 pandemic. The gradual decline of the interest rate in 2021 caused a market and first-time property buyer boom, which lasted into early 2022. As a result, the post-Covid property market might end the year succeeding its pre-pandemic success.
Seeff predicts a relatively stable South African property market moving into 2023, with high expectations of the Western Cape due to an increase in semigration trends and a much-anticipated influx of international buyers. Next year’s property market may pique the interest of European buyers, whose economy is currently facing challenges. Semigration and immigration trends are also improving rental demand, with some areas short on supply and many rent-to-buy arrangements in place.
Other inland areas in South Africa aren’t likely to benefit from these factors improving the local property market elsewhere; we expect them to have lower demand and turnover. People looking to semigrate from their homes in the North may need to lower their asking prices accordingly.
However, Seeff has witnessed a notable surge in sales in the 10 million to 15 million range in the Western Cape, which is not declining. This could positively impact Kwa-Zulu Natal, North Coast, and some Eastern Cape areas if semigration trends extend further.
Although purchasers may need to account for higher loan instalments and more significant down payments, the local market is generally in their favour. Investing in a home is still beneficial at this time, and the bank lending landscape remains positive. In contrast, the United States is experiencing the worst property year since the Great Depression. Many families are struggling to keep up with house payments that have doubled or tripled.
The rate interest rate hikes in South Africa primarily impacted lower price bands and first-time buyers. The market above R3 million is less affected by fluctuations in the interest rate but susceptible to change based on economic conditions and corporate confidence. The expanding middle class is giving rise to many new purchasers, particularly those from historically disadvantaged demographic groups.
With no predicted turmoil in the property market moving into 2023, serious sellers should market their property well and seriously consider good opportunities to sell. Serious buyers, on the other hand, should use the current state of the South African property market to their advantage and invest.
Will 2023 be the year you find your dream home? Contact us to take the first step, and we’ll help you find the perfect home. If you need to sell your current residence, you might be interested in how to price your property to sell.