Homeownership Trends in 2024: A Glimpse into the South African Property Market
As interest rates begin to decline, experts predict a promising outlook for the South African property market. Absa's Homeowners Sentiment Index corroborates this sentiment, revealing a surge in consumer confidence.
The bank has identified five key trends shaping the 2024 property landscape:
1. Solo Female Homeownership – 66,6%
The trend of single women purchasing homes continues to gain momentum. Notably, young, Black female homeowners are emerging as significant drivers of the property market.
2. First-Time Homeownership – 48%
A substantial portion of home loan applicants are first-time buyers, indicating a strong desire for property ownership. These buyers, particularly, express growing optimism about the market's future.
3. Rental Property Conversion
Converting properties into rental units, especially for short-term rentals, remains a popular strategy to generate additional income. While renting offers flexibility and affordability, many renters are increasingly considering homeownership as a viable option.
4. Off-Grid Living – 39%
The allure of alternative power solutions has somewhat waned compared to the peak of load shedding in Q1 2024 – when 42% wanted it. However, the trend persists, driven by concerns over electricity costs and grid instability. Fewer respondents also felt that alternative power solutions will markedly increase their property value at this stage.
5. Energy Efficiency
Reducing electricity cost has become a top priority for homeowners, reflecting the homeowners’ concern for the escalating price of electricity.
Overall Consumer Sentiment
Consumer confidence in the property market has remained steady in Q3, with significant improvement over the past year. While selling property remains a less confident area, likely due to the current buyer's market, overall sentiment is positive.
• Overall consumer confidence remains at 84%
• 80% believe it’s the appropriate time to invest
• 48% (up one percent from Q2) believe it’s the right time to sell
Key Factors Driving Positive and Negative Sentiment
Buyer Sentiment
- Positive Buyer Sentiment:
• 44% believe it depends on the location of the property
• 55% believe property always increases in value
• 51% believe property is and always will be a secure asset
• 52% believe that property creates long-term income
• 43% believe there is a high demand for rental properties
- Negative Buyer Sentiment:
• 60% are concerned that the economy is unstable
• 43% are concerned about the political instability in South Africa
• 46% are concerned about the crime levels
• 43% are concerned that property has become very expensive
Seller Sentiment
Like buyers, sellers also express mixed sentiments. While many believe in property's value appreciation and rental income potential, concerns about economic conditions, currency fluctuations, and affordability challenges persist.
- Positive Seller Sentiment
• 55% believe property always accumulates in value
• 51% believe you will make a good return
• 46% believe that there is demand for rental properties
• 48% believe that it is a good source of income
• 44% believe there will be a high demand for property in the future
- Negative Seller Sentiment:
• 51% are concerned that the economy is not performing well
• 34% are concerned that the Rand is weak
• 50% are concerned that prices are high
• 36% expressed concern that tenants cannot afford to rent
• 39% are concerned about job security and unemployment and tenants can’t afford to pay
As the South African property market evolves, these trends offer valuable insights into the preferences and priorities of homeowners and potential buyers.