Grant Smee
Only Realty Property Group
CEO
2024 could best be defined by a series of highs and lows for residential property in South Africa. The year’s first half marked a buyer’s lull, underscored by increased financial constraints, economic uncertainty and high interest rates.
Conversely, the rental market thrived under these conditions, with vacancies plummeting to a historic low of 4.42% in early 2024. Most notably, the country’s property frontrunner, the Western Cape, recorded the most significant rental growth, with average prices rising by 55.9% over the past decade.
According to Grant Smee, CEO of Only Realty Property Group, the second half painted a different picture. “There was an improved sentiment towards homebuying following the formation of the GNU, less load-shedding, the subsequent strengthening of the rand, lowered inflation, House Price Index (HPI) growth and two long-awaited interest rate cuts,” he says. “During this time, the rental market was impacted by a slight drop in rental inflation, with many homeowners indicating that they would rather downscale than return to renting.”
Trending in 2025
Looking ahead, Smee believes that the momentum of a 50-basis points rate cut (with the potential for more rate cuts), could be the much-needed boost the market needs. He identifies five key trends for 2025 as follows:
Interest rate cuts boost middle-income earner housing interest
“First-time homebuyers – particularly those in the middle-income earner bracket – have eagerly been anticipating the 2024 rate cuts before making a purchase,” says Smee, pointing to data from ooba Home Loans, which suggests that first-time homebuyers are particularly sensitive to external market conditions.
“And while the age of the average first-time homebuyer is older (age 35 (Q3 ’24 oobarometer)), our experience shows that there is still strong sense of enthusiasm towards property buying within this segment,” says Smee.
Smee adds that as interest rates drop and stabilise, keen buyers will look to areas with an excess supply of properties to exercise their bargaining power.
Off-plan property comeback
Plagued by oversupply in select nodes and financial constraints, 2024 off-plan property demand remained relatively subdued. “While hotspots like Cape Town CBD still sell out fast, outlying areas like Somerset West have been privy to high supply.”
Smee speculates, however, that demand for off-plan properties in 2025 will spike. “For a first-time investor or homebuyer, the idea of a lock-up-and-go property is appealing. It offers a host of added benefits such as no transfer fees, increased security, access to amenities and community living, providing buyers with the opportunity to stake a claim in some of the most sought-after postcodes in South Africa.”
Gen Z’s come to the fore
Studies have shown that while financially impacted, Gen Z has a strong affinity for property ownership. With the oldest Gen Z now at age 27, Smee believes that this generation will soon be shaping the property market as we know it.
“Reports suggest that Gen Z’s are interested in ‘fixer-uppers’, co-buying and sectional title properties as affordable investment avenues to enter the property market. International data from the National Mortgage Insurance Corporation also suggests they are ‘thrifty’ and prioritise savings.”
Can the short-term letting market sustain the demand?
2024 saw a surge in properties purchased for short-term letting purposes. However, Smee questions whether the price tags in areas like the Western Cape can be sustained in 2025.
“In parts of the Atlantic Seaboard and the City Bowl, property values have appreciated notably, with prime real estate in central and coastal locations seeing the highest increases,” says Smee.
However, with semigration tapering off and new Airbnb regulations coming into play, Smee believes that the Cape Town buy-to-let boom may be impacted in 2025. “It is too soon to tell, but seeing how it plays out will be interesting.”
More renovations, conversions and extensions
Smee believes that bond repayment reductions could lead to more renovations. “Extra liquidity on a home loan could be well spent on refinancing, renovations, conversions and extensions that will add value to a home. Sellers will prepare themselves for more demand following an improved economic outlook and may look to upgrades to help up their sale price.”
Finally, Smee points to several other notable trends for the year, which include the very slow, tentative recovery in the likes of Gauteng, where properties remain in high supply and the resilience of the luxury property market. “We believe 2025 will be a positive year for the industry across various regions and nodes.”
When asked whether 2025 could finally be the year of a seller’s market, Smee says, “In certain pockets, we are already seeing strong demand from buyers and a total shift in power. However, areas with high supply will take several years to recover,” he concludes.