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Although growth prospects for the South African housing market are improving, a "steady hand" is needed from the South African Reserve Bank (SARB) regarding the repo rate, according to Dr Andrew Golding, chief executive of the Pam Golding Property group (PGP).
He commented on the decision by SARB's monetary policy committee (MPC) on Thursday to keep the repo rate unchanged at 6.5%.
“Currently sales in the residential property market are stable, with the strongest demand in the lower to middle market segments to around R5m. Credit lending is a positive contributor to market activity," said Golding.
“While activity in the very top end of the market is moderate, buyers in the R5m to R10m price band continue to transact in sought-after locations."
In his view, the common denominator in the market at the moment is realistic pricing.
PGP continues to see an increasing demand for sectional title properties for both lifestyle and economic reasons within the major growth nodes.
House price growth in the sectional title housing segment is, therefore, still outstripping growth in freehold prices. According to Lightstone data, during the first four months of 2018, freehold price inflation averaged 3.6%, while that of sectional title property was 4.0%. Sectional title growth is accelerating, while freehold price growth is slowing.
“At present, with improved political and economic sentiment, and with the interest rate cut in March and improved outlook for economic growth, we are also seeing more affordable areas in SA’s economic heartland of Gauteng, as well as other accessibly priced properties in the various regions becoming more and more appealing," according to Sandra Gordon, PGP senior research analyst.
Seeff Property Group expects the interest rate to remain flat for the remainder of the year.
Stuart Manning, group CEO for Seeff, is of the opinion that the local economy has not yet seen a notable uptick, although the overall sentiment is up following the election of President Cyril Ramaphosa.
The early January surge has unfortunately been somewhat tempered by policy uncertainty around land expropriation.
The Seeff group remains buoyed by the more positive outlook, but cautions that one has to bear in mind that consumers have had to absorb the VAT hike along with petrol price and other cost increases.
The property market in Gauteng is picking up, according to Seeff, and for the first time in many years there has been a surge in transactions above R20m in the top-end Johannesburg areas. These markets are usually the first to feel a recovery.
The Cape metro, on the other hand, is now feeling the effects of the poor economy, drought and dip in tourism and semigration. This means most areas are reporting tight trading conditions, especially at the upper end of the market.
The lower to mid-market price ranges of around R1.5m to R2.5m are quite active, according to Manning. He too emphasises that the price needs to be right to catch the interest of buyers.
Adrian Goslett, regional director and CEO of RE/MAX of Southern Africa, said the MPC has acted fairly in response to SA's current economic climate.
"It is better that rates remain unchanged to ensure that they continue to be sustainable in our coming economic climate," he said.
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