Seeing through the uncertainty of the next 3 months for a bright 2nd half of 2025
Our notoriously prudent reserve bank took the only realistic course of action amongst global and local political uncertainty last week Wednesday by keeping our elevated interest rates the same.
This is on the back of a consumer unfriendly budget, which is still to be debated in parliament and our deepening diplomatic crises with the US, all of which is driving negative sentiment about the country and the property market. However, as always in SA where there is a negative, there is a positive. Below I take a look at the rest of the year and see what can unfold in the property markets HUNT currently operate in.
Status quo into the second quarter of the year.
From a property perspective, the market as a whole will remain hawkish driven by the lack of personal income, and an apathetic appetite to invest will be driven by local and global uncertainty, as per the below key indicators.
- The static interest rates and income tax brackets will tighten purse strings further.
- The uncertainty around our foreign policy, domestic wranglings over the BELA act, land expropriation and the budget will create an uncertain local mindset and drive negativity as winter sets in around the country.
- The global uncertainty driven by Trump’s tariff wars and two never ending armed conflicts will drive global uncertainty, and the market as a whole will remain cautious.
I predict this will affect the property market as follows:
For the country as a whole, it will remain a supressed market, with few buyers chasing elevated stock levels, keeping pricing subdued. However, there will be some loosening in the market. Year on year pricing will increase slightly as buyers will start to see value and well-priced stock will sell quicker.
The high demand areas, such as the Atlantic Seaboard, the Southern Suburbs, Stellenbosch and gated estates in the winelands, in the greater Cape will be characterized by extremely low stock levels and surface level high demand. Year on year pricing will slow slightly in comparison to the same period last year, but properties will move quicker than reasonably expected.
Green shoots starting to take root in the 2nd half of Twenty25:
I am of the opinion that we will see an increase in activity in the property market across the country in the last 6 months of the year, certainty returning to the global economic landscape, as well as a more stable local outlook, inflation remaining low, renewed and increased interest rate cuts, economic growth and catalytic announcements in the country. I’ve based this on the following predictions:
- Trump will have to show his cards regarding Tariffs, which will be proven to be mostly a scare tactic, economic certainty will return to the US and the rest of the world.
- Both the conflicts in the Ukraine and the Middle East, will cool significantly.
- On the local front, I believe that the DA will take the predictably route of posturing in public but negotiating behind closed doors to bring certainty to the populous with a united government behind, the Budget, the Bela and the Expropriation acts.
- Ramaphosa will be pragmatic in the handling of the US, with normal business resuming between the countries.
- The healthy budget allocation for infrastructure will be implemented driving positive sentiment, which will boost an economy which has already shown signs of recovery and growth in 2025.
- Low South African inflation, the need for economic activity, a strong currency, higher demand for our bonds and the stabilisation of the global economic picture will equal more aggressive rate cuts by our MPC, with a 25-basis point cut in May, and 50 basis point cut in July.
- There will be exciting announcements made in SA, with the rail network around the greater Cape Town metropolis taking a step forward, the imminent return of the South African grand prix, further development announcements around the V&A Waterfront, Winelands, KZN North Coast, KZN Upper Highway area, all driving positive sentiment and property growth.
I predict this will affect the property market as follows:
The improved economic outlook will increase demand in property in most of the rest of the country, with KZN having the most room to catch up and the better news on the horizon with development and infrastructure announcements imminent. House prices will start to increase and time on the market will start to decrease.
The improvement in economic activity, an aging population, a slight thinning out of the semigration market, traffic congestion, lack of schooling, viable alternatives in the Western Cape will mean a slight increase in stock levels and a slight decrease in demand for Southern Suburbs property, bringing an equilibrium back into the market.
Developments will start coming online in terms of construction in the Atlantic Seaboard towards the end of the year, speculative buyers will be offloading this stock creating a larger supply of stock, local investment into Airbnb and/or aparthotel product will shift into other parts of the Cape, but international buyers will increase, so the market will remain extremely buoyant just with higher stock levels.
The Cape winelands will remain hugely in demand with the Cape Winelands airport driving investment, and room to grow in terms of schools, gated estates, commercial and retail components. This is the area with the greatest room to grow in terms of sustainable growth, and value can be found in speculation, long term investment and ROI based investment.
In conclusion:
If I was looking at selling property in the in-demand areas of the Cape, I would be selling, the market won’t drop but it will cool. If I owned property around economic nodes and/or development nodes in the rest of the country, I would hold. Conversely there is value to be had from a buyer’s perspective in the rest of the country or pockets of the Cape, if you share my positive outlook I would be looking at investing. If you are looking at buying in the Southern Suburbs or the Atlantic Seaboard, don’t feel under pressure, there will be more options available at similar pricing in 6 months’ time.