It’s no doubt that 2023 was a tough year for real estate - unfavourable selling conditions, characterised by diminished affordability and tighter lending standards, have caused many homeowners to re-evaluate their decisions.

“We’ve seen many distressed homeowners looking to downsize, whose bond repayments have been straining their monthly budgets, decide not to sell - purely because the shortfall on their selling price in the 2023 market was too great to comprehend. No doubt those sellers will be back in 2024 once prices normalise,” says Hannah van Deventer, Founder and Co-Director of Phoenix Bonds.

Free State and Gauteng provinces suffered the most, with whopping 28% and 27% decreases in property sales respectively from 2022 to 2023. KwaZulu Natal and Eastern Cape were not far behind, both with a 20% decrease in property sales. Western Cape, although suffering a decrease in property sales in 2023, was one of the only provinces that was able to return to the 2021 sales figures.

For 2023, the National Credit Regulator also reported an 18.6% decrease in the number of mortgage loans granted from the previous year, as well as a 19.1% decrease in mortgage Rand values from 2022.

The property market in South Africa has proven to be quite elastic – although there are sudden lulls, then can also be sudden booms. It is quite evident when looking at how quickly property sales increased from 2022 to 2021 post-COVID, with a general 27% rise across the country. With interest rates stabilising, and fuel prices and inflation decreasing, we could see a similar bounce-back in 2024, like we saw in 2021.

Although prime interest rates are sitting at a 15-year high, we have not had a rate change since May 2023, where the prime rate has remained stable at 11.75%. The MPC strives for smooth trends in their rate announcements, so judging by the last 20 years of rate announcements in South Africa, it’s looking likely we are at the summit of this cycle, with rates expected to drop as early 2Q 2024.

A good indication of the year ahead is to assess the Big Four Banks and their appetite to lending in the mortgage space.

Standard Bank has just launched a new first-time homebuyers campaign for 2024, where the buyer:

• can now have a co-applicant that is not a first-time homebuyer;
• can apply for 108% LTV up to a maximum loan of R2.2 million – this is a significant increase from their 2023 campaign; and
• will get a 50% discount on the bond registration fees.

In addition to this, Standard Bank are offering for 5 lucky winners to have their outstanding home loan balance settled, or to alternatively receive a payment of R1m into their home loan account.

Other banks are responding to the sentiment as well, “We’ve seen attitudes change towards the 100% and costs-included loans being applied for. Whilst the bank has always offered these products, in a strained market the bank applies heavier risk factors to each application. The good news for January 2024 is that we’ve noticed a consideration relaxation of criteria and increased appetite for lending,” says Gary Bradfield, National Director at Phoenix Bonds.

The option for homeowners to access credit, with all lenders and competitive products back in the market, is the cherry-on-top for what is looking to be a fantastic next few years in the real estate industry.

Phoenix Bonds is a premium home loan comparison service. They work with purchasers from the moment they decide to purchase a property. Successful home ownership is not putting people into homes, it’s making sure people keep their homes. This is where the importance of the home loan prequalification comes in – to ensure the purchaser is aware of what they can afford once all the costs of home ownership are included. A competitive rate on the home loan ensures household costs are reduced for the next 20 years or so.

Click here to start your journey of home ownership in 2024.