Looking ahead to the new year, here are some of the top trends BetterBond will be keeping an eye on:
Interest rates. Interest rate hikes have impacted consumers’ home loan affordability. Even if rates hold steady for a few months, before hopefully coming down in 2024, it’s likely that home buying will remain subdued. “BetterBond data shows that average home purchase prices have stayed virtually unchanged year on year, so any positive shifts in interest rates could spark activity in the housing market,” says Bradd Bendall, BetterBond head of sales.
First-time buyers. In 2024, this important buyer segment will still find some comparatively affordable options in new residential developments in the Free State, Mpumalanga and Limpopo. “BetterBond data shows that, despite price increases, first-time buyers have retained a share of more than 60% of home loan applications the past two years. This is likely to continue in 2024,” says Bendall.
Small towns. South Africa is famous for its charismatic small towns and many have become highly sought-after places to live since the pandemic, as remote work becomes more prevalent. “Towns along the coast, like Hermanus, Mossel Bay, and Langebaan, formerly thought of solely as holiday destinations or retirement towns, have become desirable locations for primary residences,” says Bendall. According to Lightstone, 26% of buyers semigrating in 2023 chose to settle in smaller towns.
East London, Eastern Cape
Coastal living. Lightstone reports that the Western Cape remains the preferred destination for semigrants, with 59% of housing sales in the region attributed to buyers from Gauteng. According to StatsSA, just over 80% of the value of residential building plans passed in 2022 were for the Western Cape, KwaZulu-Natal and Gauteng. The coastal provinces of the Eastern Cape and KwaZulu-Natal are also gaining popularity as semigration remains a major driver of the South African residential property market.
Space for a home office. With hybrid work and working from home (WFH) becoming the norm in many sectors, we will continue to see demand for homes that have enough space for a home office. “We expect to see homeowners taking out more building loans to renovate their homes to accommodate the work-from-home option, increasing their property value in the process,” says Bendall.
Mixed use, with a modern twist. “The ‘live, work, play’ value proposition is not new, but we are seeing the expansion of the mixed-use concept. Commercial buildings in central business precincts are being repurposed for residential use,” Bendall says. We expect increased demand for this modern way of communal living where a property offers a sense of community to residents from many different backgrounds, and the convenience of an array of lifestyle options in a single location,” says Bendall.
The Bridgewater mixed-use development in Century City, Cape Town
Collective buying. As economic challenges persist, expect to see more collective home buying. Many South Africans are already sharing homes and family responsibilities with parents or siblings sharing living spaces and household expenses.
Collective saving schemes like stokvels, offer an increasingly popular way to buy property. Some South African banks offer collective buying home loans, so groups of up to 12 people can purchase a property together, each contributing to the monthly instalment. “While interest rates remain high, we expect to see more stokvel activity next year as South Africans continue to prioritise home buying as a way of securing their financial futures,” says Bendall.