HEIBERG ESTATES NEWSLETTER JANUARY 2019.

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2019 SA PROPERTY MARKET SHOULD LIFT ITS HEAD AGAIN!

Dear Property Partners

May the Heiberg Estates Team make use of our first 2019 Heiberg Estates Newsletter to wish you a very, very happy and prosperous 2019. I think we shall all agree that this year can only be a better year than the very challenging and demanding 2018.

At least we had a good start to this year with the SA Reserve Bank not increasing the interest rate, and leaving the repo rate unchanged at 6, 75% with the lending rate stable at 10.25%. However, it is expected that the SA Property Market and property prices will remain to be under pressure and very competitive at least until after the elections.

Looking at the year ahead, expectations all point to the fact that the Buyer’s Market trend will continue throughout this year, offering excellent property investment opportunities. Looking at how this year started, it is heart-warming to observe renewed enthusiasm and momentum picking up under prospective Buyers. So far our Heiberg Estates Show houses were much better attended than last year, and fortunately people are putting their hand on paper and making offers to purchase. Excellent sales were achieved so far, kick-starting the year for which we are truly grateful.

We have all reason to belief that the momentum will be sustained as we progress further into the year after a very stagnate property market experienced during 2018. Of vital importance will be for Sellers to be aware of market trends and ensure that through professional agent assistance, their properties are priced market related and correctly. This in order to achieve a successful sale, especially since the banks are also valuating properties at very conservative rates in order to limit their risks.

Some of the latest interesting property related facts and statistics:

  •  Due to unrealistic selling price expectations as well as the property market being (and remaining to be) highly competitive and under pressure, in average 96% of Sellers had to drop their price after listing in order to sale their properties successfully last year.
  • There is a visible trend of homeowners selling in order to downscale due to increasing costs of living, looking for smaller properties closer to work, good public transport system, schools and universities.
  • Semigration also slowed down with fewer people moving to the Western Cape due to the water crisis whilst emigration is on the increase. According to the FNB House Price Index, over 7, 5% of property owners with their properties on the market are packing up and leaving SA. This trend unfortunately is expected to increase over the course of this year on the back of a weakening sentiment in SA related to our uncertain economic and political state of affairs.
  • How much the SA Property Market has lately been challenged, is also reflected in the new mortgage lending rate that decreased on a year-to-year basis last year by an average of between 15% and 16%.
  • The above trend was very visible in specifically the Commercial Mortgage Loans Segment where the year-on-year rate has declined by -32, 02%. New mortgage growth as recorded last year, was the lowest in the Construction and Building sectors.
  • The average deposit that Buyers paid, has also declined and was recorded at an average of 12% of the purchase price during the last quarter of 2018, whilst the average age of Buyers was 38 years old and first time Buyers 34 years.
  • On the rental side, increasing empty office space is causing reason for concern. Demand for commercial office space is stagnant and remains poor as companies cut back on costs. Vacant office space across SA is estimated to be around 11%. Our economy needs to grow by at least 3% in order for empty standing office space to start decreasing again as offices are largely driven by economic growth – the latter predicted at this stage to average around 1,5% for the coming year.
  • The SA Property Market needs stability and the fact that the SA Reserve Bank decided this month not to increase the repo rate and left it at 6,75% with the lending rate stable on 10,25%, is widely welcomed. With property prices declining and under continued pressure, making it the perfect time to enter the property market, especially amongst first time buyers.

All around, property specialists are cautiously optimistic and expecting year-on-year property growth strengthening to be mild, constraint and in single figures. This sentiment reflecting our weak and uncertain economic and political state of affairs, combined with weak business and consumer sentiment.

One of the factors that we shall have to closely keep in sight, is Moody’s credit grade decision to be made public in March. Should they decrease our grading, it will put enormous pressure on our volatile rand and in turn that will have a definite impact on our inflation rate and subsequently the interest rate. Our property market needs stability and an increase in the repo/interest rate will not bide well for our property sector. But in general, so far not many economists are predicting a further interest rate hike in the foreseeable future.

We all are aware that 2019 will yet be another challenging year lying ahead of us, and that many potential investors over a broad front will adopt a wait-and-see attitude to gauge the political and economic state of affairs in the run-up to the elections later this year. Many clarifications need to be done as a matter of urgency, especially getting the criteria and procedures in place in specific referral to land expropriation without compensation as well as the Mining Charter. This in order to make it possible for investors to enter these sectors with fundamental securities in place to protect their investments.

However – the current market is as good as it can be and in favour of the Buyers who should grab the perfect opportunity and buy before the market most probably will swing back after the elections in favour of the Seller, when things go more positive for our country with much more clarity established regarding land expropriation and our fragile economic and political state of affairs.

Never underestimate the immense value that a well experienced, reliable and professional estate professional can do to enable you not only to find the right property, but also at the right, market related price. And that is where our professional Heiberg Estates team remain to be on 24/7 standby to advise, guide and lead you throughout the whole process until successful transfer of the property.

There are excellent Residential as well as Commercial properties just waiting for the right Buyer and for a quick scan and looking at photos and videos, please refer to our website: www.heibergestates.com

Residential Principal’s Choice for January – see videos: http://www.heibergestate.co.za/hb/listings/bro280b-a-cutie-pie-in-murray-street-close-to-brooklyn-primary/

Commercial Principal’s Choice for January: http://www.heibergestate.co.za/hb/listings/wat170-ideale-korporatiewe-gebou-perfekte-ligging-pragtige-uitsig-oor-menlyn/

Best and warm regards to you all!

Sincerely

Bambie & Heiberg Estates Team