South Africans are certainly facing tough economic times and with petrol set to skyrocket by R1.01 a litre and diesel by R1.24 in October, no relief for the short term seems to be on the horizon. Real estate has felt the knock-on effects of many of these economic cycles and certain markets have been adversely affected, however one part of the sector seems to have shown far more stability, and that is affordable property.
To a large extent, this trend also includes regional data, but we've undoubtedly noticed that many of our major centres' affordable property markets have remained relatively stable.
There are many factors that have led to this, one being necessity purchases over purely investment home buying. We find that in the affordable sector, activity often defies that of the luxury sector due to the need for the home.
Buyers in this segment of the market tend to be families looking for a home to live, first-time buyers entering the market with smaller budgets as well as people who are downscaling, like pensioners etc. Therefore the need to find a place to live is far greater than that of an investor purely searching for investment opportunities.
Taking this into consideration, buyers then do not make the economic cycles of the country a primary buying indicator but rather look at things like proximity to schools and business districts, the potential for expansion and long-term living as well as affordability.
We predict this segment of the market going from strength to strength and as the economy hopefully starts to gain some ground, we believe the value of the homes will show similar patterns.
Harcourts Africa Chief Executive Officer