2016 has posed many financial challenges to people. According to Dr Andrew Golding, chief executive of the Pam Golding Property group, political and economic uncertainty is likely to continue into 2017, however, it is hoped that local economic growth will be modestly stronger. This will offer more support for the South African housing market.
Both historically and currently, global uncertainty has made property an attractive investment, offering potentially good returns, as well as the opportunity for capital preservation.
According to Golding, a number of trends are likely to continue in the property market in 2017. These include:
- The want by many first time buyers to acquire a foothold on the property ladder and own their own homes.
- The continuation of the trend to invest in mixed-use developments, largely in metropolitan hubs, in addition to the development of secure private estates and sectional title complexes.
- “The transition to ‘green’ and sustainable living as pricing pressures resulting from the prolonged drought and rising electricity tariffs will see a continued shift to energy and water efficiency,” stated Golding.
- Lastly, Golding noted that importance of understanding the dynamics of the housing market when making investment decisions as another trend that will continue. This includes factors such as the ongoing migration of people, the supply of new housing units, as well as lifestyle trends.
The economic impact on the property market
“Economists and commentators in general are more positive about growth next year, while business confidence has improved, which in turn enhances overall sentiment which is a key driver of the residential property market,” said Golding.
The performance of the Rand plays a pivotal role, however, Golding highlighted that the general consensus is that inflation will fall noticeably by the second half of 2017. It is hoped that the Reserve Bank will look to cut interest rates during the latter part of next year.
“While the prospect of anticipated stronger US growth would support the South African economic growth rate, a stronger US dollar and increase in US interest rates may impact the Rand, with implications for inflation and exerting pressure on our own interest rates,” noted Golding.
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