South African Property in 2018

The South African property market is expected to see slightly stronger property price growth in 2018, following three years of slowdown.

Despite the slowdown, South African property prices grew nationally by 3.7 per cent in 2017, a figure expected to rise to around 5 per cent this year according to John Loos, household and property sector strategist at FNB.

Mr Loos said: ‘This is not a major improvement, but it stems from expectations of marginal economic growth improvement in 2018, from an estimated 0.7 per cent last year to 1.2 per cent, and one lone interest rate hike only late in 2018 not expected to have a significant dampening effect.’

A Reuters poll showed that South Africa’s Reserve Bank is expected to leave interest rates unchanged at its January 18 meeting.

Despite strong rand moves against the dollar, most notably towards the end of December 2017 of the 20 economists polled by Reuters believe that the bank will leave the rate at 6.75 per cent. The other three expected a 25 basis points cut.

Jeffrey Schultz, economist at BNP Paribas, said: ‘We now think that the (bank) will wait until after the February national budget in order to assess whether the Treasury has done enough to appease Moody’s.’

FNB confirmed that 2017 saw its House Price Index growing by 3.7 per cent, a slowing on 2016, and the third consecutive year of slowing annual average price growth, saying: ‘We had expected a slower house price growth rate in 2017, with the country’s economic growth performance having stagnated for some years.

‘However, monthly house price growth has been accelerating recently, pointing to a stronger start to 2018, with leading economic indicators suggesting that house price growth could receive slightly more support from the economy this year, compared to 2017.’

Though price growth in South African property of 3.7 per cent could hardly be said to be negative anyway, it seems that the downturn could be about to end. Overseas property investors take note.