2023 is Set to be the Year for the Rental Market
Forecasting the year and assessing both risk and opportunities are an essential part of the process toward success. That is how Harcourts South Africa has grown faster than the market for the past 11 years in a row. The rentals market is set for a great year especially as we are reaching the top of the interest rate cycle and will not see too many more rate increases.
The interest rate increases are due to inflation, and it appears that inflation is slowly coming back under control. A lot will depend on the Rand strength and oil price. If these remain stable, we could see interest rates remain level throughout 2023 with a small chance that they might even come down slightly towards the end of the year.
This undoubtedly impacted the residential property market, and we have seen a marked slowdown from the highs of 2021 and the beginning of 2022. Consumers are a lot more stretched. I don't believe that there will be a significant further drop in market activity next year.
Largely due to the banks continuing to lend responsibly but strongly, buyers with good credit records buying well-priced homes are getting finance. Secondly, we are seeing the return of investor buyers, who are acquiring more reasonably priced stock. Finally, we have seen the number of overseas buyers starting to increase again for the first time since the pandemic. So, while the interest rates have reached pre-Covid levels, the residential property market is still resilient.
Rentals took a big knock during the low-interest rate cycle as many tenants moved to become homeowners. This has definitely swung back to a more normal position and we have seen our property management numbers increase again during 2022. As affordability becomes an issue for buyers, we will see more people renting.
We expect the Rental sector to continue growing as investors buy more properties. The "middle market" is very strong and resilient, but I am concerned that the top end of the market will continue to be slow and impacted by political and economic uncertainty. The lower priced end of the market is very sensitive to the poor economic conditions and will probably only improve once we see better economic growth and job creation.
The resilience of the South African property market and South Africans desire to own a home assist in combatting turbulent times. Connect with a Harcourts agent in your area and get the necessary advice and guidance on the market.
16 Jan 2023
Author Harcourts South Africa
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