South Africa’s property market has been a reflection of significant lifestyle, environmental, and economic changes in recent years and 2024 will not be any different.
Load shedding has forced wide-scale home solar installations, tough economic conditions have caused many people to downscale, and work-from-home has seen growing demand for home office space; so what trends can we expect to to rule the market over the next 12 months?
Well, say property experts, a number of transformative shifts promise to reshape the way we buy, sell, and experience homes in the new year.
Looking back at 2023, Yael Geffen, chief executive of Lew Geffen Sotheby’s International Realty, says the market witnessed ongoing demand for dedicated home offices and flexible living spaces, and interest in smart technologies skyrocketed. Sustainability also came to the fore as increasingly eco-conscious consumers sought homes with green features and a growing number of developers prioritised eco-friendly construction practices.
“Looking ahead, the evolution continues, and the real estate landscape is moving further and further from the traditional, becoming a canvas for innovation, blending cutting-edge technology, sustainability, and community-centric design.”
So, if you plan to make 2024 the year you buy your first or second home, sell your property, or look for a new place to rent, these are some of the trends expected to shape the real estate market, and your journey:
1. Interest rate effects
Interest rate hikes have impacted consumers’ home loan affordability and even if rates hold steady for a few months, before hopefully coming down early in 2024, Bradd Bendall, head of sales at BetterBond, says it is likely that home buying will remain subdued for a while. However, pockets of opportunity to meet buyers’ needs remain across the country.
“BetterBond data shows that average home purchase prices have remained virtually unchanged year on year, so any positive shifts in interest rates could spark activity in the housing market.”
Generally speaking, Dr Andrew Golding, chief executive of Pam Golding Properties, says the outlook for next year is likely to show an improvement in a number of key residential property metrics when compared to 2023. Dominating this improvement in outlook will, hopefully, be the start of a downward trend in interest rates which nearly always signals an uptick in activity. As a consequence, it is also likely to herald the start of a cycle of real house price growth.
“Furthermore, with the toll that load shedding took on the economy in 2023 hopefully expected to ease significantly during the course of next year, prospects for growth should improve.
“We also anticipate a continued divergence between the performance of different regional and metro housing markets - reflecting both the stability of the local municipality, the affordability of homes, the strength of the local economy and the lifestyle offering of the town/suburb. This will make location an increasingly important factor.”
2. Rise of green homes
Golding says the shift to ‘green’ homes will become more mainstream as, even though load shedding may ease, the rising cost of electricity – coupled with some measure of load shedding, is likely to make the shift to solar appealing for those who can afford it.
“The continued breakdown in municipal services...placing greater pressure on limited infrastructure, will make going off-grid or at least increasing self-sufficiency an increasingly appealing option.”
Geffen agrees, saying that sustainability will continue to take centre stage as eco-conscious buyers seek homes that align with their environmental values. Similarly, builders and developers are focusing on green construction practices, energy-efficient designs, and eco-friendly materials.
“Sustainable features, such as solar panels, energy-efficient appliances, and smart home technologies, are becoming key selling points in the real estate market.”
3. Joint home buying
As economic challenges persist, South Africa should expect to see more collective home buying. AS it is, many South Africans are sharing homes and family responsibilities with parents or siblings.
Citing 2020 StatsSA data, Bendall says just over 45 percent of households were already ‘double generational’ – parents and children living together, while almost 15 percent housed three generations in one home.
Collective saving schemes, ‘stokvels’, offer an increasingly popular way to buy property.
“Some of South Africa’s big banks have launched collective buying home loans that allow up to 12 people to buy together, with each person contributing towards 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.”
4. Work-from-anywhere influence
The work-from-anywhere culture continues to influence real estate decisions and, as remote work becomes a long-term reality for many, Geffen says homebuyers are prioritising properties that offer dedicated home offices, flexible workspaces, and robust internet connectivity.
“Suburban and rural areas are gaining popularity as buyers seek larger homes with outdoor spaces for both work and leisure.”
Similarly, with hybrid work and work from home (WFH) becoming the norm in many sectors, Bendall says the market will continue to see demand for homes that have enough space for home offices.
“In addition, we expect to see homeowners taking out more building loans in the new year, to renovate their existing homes to accommodate the work-from-home option, also increasing their property value in the process.”
5. Community-centric living
Community-centric living is starting to take precedence, especially amongst millennials, as buyers increasingly prioritise neighbourhoods that offer a sense of community, amenities, and a high quality of life, Geffen says.
“Walkable neighbourhoods, communal spaces, and proximity to essential services are key factors influencing purchasing decisions and developers are responding by designing mixed-use developments that integrate residential, commercial, and recreational spaces.”
Echoing this, Bendall says the live-work-play value proposition is not new when it comes to residential property sales, however, the mixed-use concept is being expanded to encompass even more than before.
“Commercial buildings in central business precincts are being repurposed for residential use. In the Cape Town CBD, for example, the old Standard Bank building on Thibault Square has been converted into a space that now includes an aparthotel and Airbnb-style accommodation as well as a residential section.
“In Johannesburg, developers continue to buy the oversupply of office space and redevelop them for either residential or mixed-use.”
The 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, is expected to continue next year, Bendall states.
Golding adds that agility will be key in 2024 and likely to result in the residential property market (much like other sectors of the property market) being forced to be as flexible as possible.
For example, new residential developments which offer units for purchase as well as short and long-term rentals (with aparthotel facilities), and mixed-use which allows for commercial and residential in a single new development, will be sought-after.
6. Affordable housing solutions
Geffen says the demand for affordable housing solutions continues to grow, prompting innovative approaches to address the affordability challenge.
“Modular and prefabricated housing, co-living arrangements, and community land trusts are emerging as viable solutions to make homeownership more accessible. Governments and developers alike are exploring creative avenues to bridge the affordability gap.”
7. First-time home buying
Bendall says this important buyer segment will still be able to find some comparatively affordable options in new residential developments in the inland provinces of the Free State, Mpumalanga and Limpopo.
“BetterBond data shows that, despite price increases, first-time buyers have managed to retain a share of more than 60 percent of all home loan applications for the past two years, and this positive statistic is likely to be carried forward into 2024.
“The top three areas in terms of average home loan values granted to first-time buyers, over the past 12 months, have been the Western Cape, Greater Pretoria, and Mpumalanga.”
8. Rural retreats and second homes
Geffen says the allure of rural retreats and second homes is on the rise as individuals seek escapes from urban congestion - and to diversify their property portfolios.
“The desire for tranquillity, outdoor amenities, and spacious properties is driving demand for homes in rural and vacation destinations. This trend is fuelled by a shift in priorities and a re-evaluation of lifestyle choices.”
South Africa is famous for its charismatic small towns and Bendall says many of these have become highly sought-after places to live since the pandemic as more people are able to do hybrid or remote work.
“Small towns along the coast, formerly thought of solely as holiday destinations or retirement towns, have become desirable locations for primary residences. Here, we are thinking of places like Hermanus, Mossel Bay, Langebaan.”
According to Lightstone, 26 percent of buyers semigrating in 2023 chose to settle in smaller towns for the laid-back lifestyles and superior service delivery these locations offer.
9. Properties that offer added value
With the cost-of-living skyrocketing and the economic landscape looking bleaker by the day, a growing number of people are looking for properties that deliver more than a roof over their heads – they want one that can accommodate a side hustle, Geffen says.
“So we will be seeing more and more demand for homes with cottages/flatlets which can be rented out or affordable investment units in a popular tourist areas – especially those favoured by foreign visitors who benefit from a favourable exchange rate.”