There is a growing sense of optimism in the residential property market, says Paul Stevens, CEO of Just Property. This is supported by economic reforms, political stability, and shifting trends in buyer and tenant behaviour. Stevens’s insights into the opportunities and challenges ahead paint a picture of a market poised for growth.

Economic and Political Context

South Africa’s economy is beginning to show signs of recovery, with inflation declining from 5.3% at the start of 2024 to 3.8% by October. This decline sits comfortably within the target range of 3–6% and has allowed the South African Reserve Bank (SARB) to lower interest rates twice in recent months.

“While these cuts were smaller than anticipated, they signal a trend that should bring relief to consumers,” Stevens explains. If inflation numbers remain at this level, he anticipates at least a 1% reduction in interest rates over the course of 2025, which would ease financial pressures on households and boost market activity.

The May 2024 elections and the formation of a Government of National Unity (GNU) have fostered optimism, strengthening South Africa’s currency and public sentiment. “The GNU has given people and investors hope for the future,” Stevens notes. However, he acknowledges challenges, such as reducing the number of state employees in a country grappling with high unemployment. The government’s performance in tackling these issues will be critical in maintaining momentum, he says.

Trends

Semigration continues to shape the market, with coastal cities and towns like Langebaan, Hermanus, Plettenberg Bay, and St. Francis Bay drawing buyers. Stevens notes that the Western Cape remains a consistent magnet, with property prices increasing by 39% between 2019 and 2023 (according to Lightstone). Eastern Cape towns, including Gqeberha (formerly Port Elizabeth), are also emerging as hotspots due to significant infrastructure investments.

KwaZulu-Natal has also seen growth, particularly along the north coast in Umhlanga, Ballito, Salt Rock, and Umdloti, where property prices rose by 19% during the same period.

Security estates and sectional title properties are gaining popularity due to safety concerns and affordability. “Developers are focusing heavily on gated communities, which appeal to a wide demographic,” says Stevens. He predicts this trend will continue to reshape urban living. “Freehold properties still dominate, but sectional titles and estates are rapidly growing in demand.”

The luxury market remains robust, particularly in the Western Cape, Gauteng, KwaZulu-Natal, and the Northern Cape. Stevens attributes this to cash buyers, who are less sensitive to interest rate fluctuations. “This segment is resilient and continues to perform well, driven by both local and international demand,” he adds.

Rental Dynamics

The rental market is experiencing its strongest growth in years, with national rental inflation at 4.8% in Q3 2024 (PayProp). Stevens notes that, on average, tenants now spend less than 30% of their income on rent—a critical benchmark for affordability. This improvement is driven by wage growth and declining debt burdens.

Vacancy rates remain low, creating an ideal environment for landlords. However, Stevens cautions against overpricing. “Landlords should focus on retaining good tenants at fair, market-related rentals,” he advises.

Regionally, the Western Cape leads with rental growth of 9.3%, followed by Limpopo at 8.4%. Gauteng and Mpumalanga, however, lag behind, with growth rates of 3% and 0.7%, respectively. Stevens attributes these disparities to demand for lifestyle properties and varying levels of economic activity.

Investment Opportunities

The buy-to-let market remains active, buoyed by decreasing interest rates and low vacancy levels. Savvy investors are finding value in well-located properties. “It’s a good time to expand portfolios, but due diligence is essential,” Stevens emphasises.

South Africa’s coastal cities, particularly Cape Town, continue to attract international buyers. Smaller Western Cape towns like Hermanus, Knysna, and Plettenberg Bay are also gaining popularity for their relaxed lifestyles. “Foreign buyers are drawn to the combination of natural beauty, infrastructure, and affordability,” he observes.

Challenges and Risks

Despite the positive outlook, challenges remain. Affordability is a persistent issue for first-time buyers. Stevens advises saving towards a 10% deposit and getting prequalified by a mortgage consultant. “Knowing what you can afford and planning for worst-case scenarios is crucial,” he notes.

Municipal service delivery is another risk, as poorly maintained services can impact property values and investment potential. “If the bulk infrastructure in an area is collapsing, property values may decrease,” Stevens warns.

Future Outlook

“We are moving into an ideal property investment cycle,” says Stevens. “With optimism and strategic planning, there’s much to look forward to in the year ahead. I feel very confident that our property market is entering a good upward cycle. This will be spurred by decreasing interest rates and improvements in the economy. Consumers, who have been under pressure for years, will slowly start to see relief.”

For more information on Just Property, please visit www.just.property. Follow Just Property on Facebook and LinkedIn.

Press Release Submitted By

Company Name: Just Property
Contact Person: Paul Stevens
Website: www.just.property

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South Africa's Property Market Set for Growth
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