PROPERTY PREDICTIONS FOR 2025
Category Residential Property News
As we step into 2025, the South African property market is poised for significant shifts. But before exploring the opportunities and challenges ahead, it is essential to reflect on two major themes that dominated 2024 and set the stage for the year to come:
- Global and Local Elections: Half the world went to the polls, including South Africa, resulting in the formation of a Government of National Unity (GNU).
- Interest Rate Adjustments: While the timeline and magnitude were uncertain at the start of 2024, interest rates finally began to decrease.
A Strong Foundation: 2024's Defining Trends
From a South African perspective, we couldn't have asked for better outcomes. The GNU has been a catalyst for renewed optimism, addressing structural issues and restoring confidence in the property market. Markets have responded positively, with South African bond yields decreasing by approximately 2%, and financial shares, including banks, showing growth. Additionally, the "fix" of load shedding, however it was achieved, has bolstered investor confidence and laid the groundwork for economic growth.
On the interest rate front, the South African Reserve Bank (SARB) delivered two 25 basis point cuts in 2024, creating relief for homeowners and buyers alike. Predictions for 2025 suggest further gradual reductions, with three to four cuts expected in the year ahead. While the SARB remains conservative, this measured approach will likely shield the economy from future rate hikes. For now, these cuts enhance affordability and incentivise both first-time buyers and investors.
2025's Market Outlook
If the positive momentum from 2024 continues, we foresee the following key trends shaping 2025:
- Increased Sales Volumes: As confidence grows, sales volumes will likely pick up first, continuing their upward trend from the June 2024 slump. Price appreciation typically follows increased sales, so reduced stock levels will be the first step toward a more robust market.
- Bank Support: South Africa's financial institutions have long been the backbone of homeownership. We expect continued support in friendlier trading conditions, further driving market activity.
- Regional Opportunities: While the Western Cape remains popular, KwaZulu-Natal offers exceptional value. With interest rates falling, properties within the region present attractive investment opportunities for the savvy buyer.
- Economic Growth: Economists predict a 2% GDP growth for 2025, driven by the resolution of load shedding, the "Two Pot Retirement" reforms injecting capital into the economy, and improved political stability. If realised, this would mark the highest GDP growth in a decade, further fuelling the property market.
Strategic Advice for Buyers and Sellers
Buyers should take a thoughtful approach by comparing similar properties in the area and focusing on what a home truly offers rather than just its cosmetic features. At the same time, sellers are encouraged to work closely with their agents and consider their advice on pricing their homes appropriately for the current market conditions to attract serious buyers..
Risks to Watch
While the outlook is optimistic, potential geopolitical conflicts, inflationary pressures, and global economic uncertainty could disrupt progress. A Trump presidency in the U.S., for example, could bring tariffs and inflationary increases. Staying informed and adaptable will be crucial.
A Year of Opportunity
We are more optimistic about the residential property market in 2025 than we have been at the start of any year since 2016. With the foundations laid in 2024, we believe this year holds immense promise for buyers, sellers, and industry professionals alike.
At Wakefields, we remain committed to empowering our clients and agents with the insights, tools, and support needed to thrive in a dynamic market. Here's to a year of growth, prosperity, and sound property investments!
Let's navigate the future with confidence.
Author: Myles Wakefield
