Cape Town - The residential property market in SA is turning from the sellers' market in 2015 to an anticipated buyers' market in 2017, Shaun Rademeyer, CEO of Betterlife Home Loans, told Fin24 on Thursday.
"We saw a volume increase of about 2% to 3% year-on-year from 2012 to 2015 and price wise there was about a 5% to 6% year-on-year nominal increase country wide in 2015, but now we see the market is slowing," he said.
"There was a high demand for property in 2015, for instance, due to favourable interest rates and banks' lending requirements being good. So market was very buoyant."
In late 2015 and early 2016, when the interest rate cycle started going up again and with the impact of "Nenegate" and other economic factors, consumers came more under pressure. Many consumers need to downscale, for instance, because they cannot afford their current properties anymore.
"Buyers are, therefore, becoming more cheeky regarding their offers in the changing market," explained Rademeyer.
That is why, in his view, sellers need to make sure they are well educated about property prices in their area.
"Just looking at property portals and thinking asking prices are what you can get is not good enough. You must know what you can sell for," cautioned Rademeyer.
"Negotiation is, therefore, becoming a strong part of the selling process. In times like these it is best, in my opinion, to sell through a good estate agent. It is not that I am promoting estate agents, but negotiation is becoming a big part of the home buying process."
As for geographic trends, he said the property market in outlying areas, especially in mining towns show a "pull back". In metro areas like Johannesburg, Sandton and Cape Town, however, the property industry is still doing well, in his view.
"Yes, affordability in the market and inflation made an impact, but we see good transactions in these hubs," said Rademeyer.
Apart from increased urbanisation, the other geographic trend he notices is the continued move from Johannesburg to coastal towns.
"People are willing to commute in order to provide a certain lifestyle and education for their children, while continuing to work in Johannesburg," said Rademeyer.
As for bonds, he said banks are taking into consideration the pressure consumers are under. They want to be sure a bond repayment is affordable. They are also asking for higher deposits.
Many consumers are also looking at what it would cost to sell and buy a new property compared to rather upgrading an existing home.
As for buying property as an investment, Rademeyer said when buyers are able to negotiate on a price - like he foresees will be increasingly the case in 2016 and 2017 - it becomes more lucrative for investors. This is also the case where forced sales might be increasing due to economic circumstances.
"Investors are going to be cheeky. Be well educated about property in your area so as not to be exploited as a seller. The property industry has been healthy for the past five to six years," he said.
"It is always good to invest in your own property as long as you look at it from a long-term perspective. Owning property is always key for people to move forward."