Insights on 2023 South African Property Market Trends by Urban Soup's Ray Harli

The South African property market has been subject to considerable uncertainty in recent years, which may have caused some investors to hesitate. However, there are positive signs that suggest a more promising outlook for 2023. With increased interest in real estate investment from both domestic and international buyers, there is potential for growth and prosperity in the South African property market. Chatting with Ray from Urban Soup, a Johannesburg-based developer, we delve into the trends and factors that will drive the property market in 2023.

Ray's company, Urban Soup, recently listed their property on our platform, One On Anne. The property is located in the beautiful neighborhood of Sandringham and is expected to generate a net rental yield of 9.5% guaranteed for 2 years for EasyProperties investors. Interestingly, the addition of One on Anne's 57 sectional title units will more than double the local sectional title market in Sandringham.

1. What is your overall outlook for the 2023 property market in South Africa?
   When it comes to the 2023 property market in South Africa, there are certainly some factors to consider. There has been a degree of uncertainty in the market in recent years, which may have caused some initial investment hold back.
   
   However, there are some positive signs that suggest a more optimistic outlook for the coming year. For one thing, there has been an increased interest in real estate investment from both domestic and international buyers. While there may be some challenges to overcome, such as ongoing concerns about the COVID-19 pandemic and economic volatility, I believe that the South African property market has the potential for growth and prosperity in 2023. Investors who approach the market with caution and a long-term perspective could see promising returns on their investments in the years to come.
   
   
2. What factors do you think will drive the property market?
   One significant factor that I believe will drive the property market in 2023 is the growing trend of remote work, which has become increasingly popular since the onset of the COVID-19 pandemic. As more and more people realise that they can work effectively from anywhere, there is likely to be increased demand for properties that offer flexible working arrangements.
   
   This could manifest in several ways, such as increased demand for homes with dedicated home offices or properties with communal workspaces. Additionally, the trend towards remote work could lead to more people relocating to areas outside of major cities, as they are no longer tied to a specific location for work.
   
   Furthermore, the shift towards remote work could lead to increased demand for properties with good internet connectivity and other amenities that support a remote work lifestyle.
   
   In summary, the trend towards remote work is likely to be a significant driver of the property market in 2023, with increased demand for properties that offer flexible working arrangements, good connectivity, and other amenities that support a remote work lifestyle.
   
   
3. Do you expect any significant changes in property prices in certain regions of South Africa?
   We do expect some significant changes in property prices in certain regions of South Africa in 2023. One trend that we have seen in recent years is that coastal regions have experienced significant growth in property prices, while inland areas have remained relatively low.
   
   This is partly due to the fact that coastal regions are often seen as desirable locations with remote working becoming a reality, which can drive up demand and prices. Additionally, coastal areas often have a higher level of amenities, which can further increase their appeal to buyers.
   
   However, it's worth noting that there are many factors that can affect property prices, and it's difficult to predict exactly how each region will perform in the coming year. Other factors such as economic stability, interest rates, and government policies can also have an impact on property prices.
   
   Overall, while coastal regions may continue to experience significant growth in property prices, it's important to consider each region's unique characteristics and factors when making predictions about the property market.
   
   
4. Are there any emerging trends in the South African property market that you believe will gain momentum in 2023?
   One emerging trend in the South African property market that I believe will gain momentum in 2023 is the growing interest in off-grid living. With concerns over rising energy costs and energy supply issues, more buyers are looking for properties that are self-sufficient and sustainable.
   
   Off-grid properties often feature solar panels, rainwater harvesting systems, and other environmentally friendly features, which can help buyers reduce their environmental footprint and save money on energy costs over time. Additionally, off-grid properties can offer a sense of independence and self-sufficiency, which can be particularly appealing to buyers who value privacy and autonomy.
   
   Another emerging trend in the South African property market is the growing importance of security. With concerns over crime and safety, more buyers are looking for properties that offer robust security features. Additionally, security systems that are connected to smartphones and other devices are becoming increasingly popular, as they allow residents to monitor their properties from anywhere and respond quickly to potential security threats.
   
   
5. How will the state of the South African economy affect the property market?
   The state of the South African economy can affect the property market both from the perspective of local buyers as well as international buyers.
   
   From the perspective of local buyers, the state of the economy can have a significant impact on their ability to afford and purchase properties. Factors such as high unemployment rates, inflation, and interest rates can reduce the affordability of properties and make it more difficult for local buyers to secure financing for their purchases. This can lead to decreased demand for properties and lower property prices.
   
   On the other hand, a strong and stable economy can lead to increased employment rates, higher disposable incomes, and lower interest rates, all of which can increase the purchasing power of local buyers and stimulate demand for properties. This can lead to increased competition for properties and higher property prices.
   
   From the perspective of international buyers, the state of the South African economy can also influence their decisions to invest in the property market. A weak economy, high inflation rates, and political instability can lead to decreased investor confidence and reduced demand for properties from international buyers. Additionally, fluctuations in the exchange rate can make South African properties more or less attractive to foreign investors.
   
   On the other hand, a strong and stable economy with favorable exchange rates can make South African properties more attractive to international buyers. This can lead to increased demand for properties and higher property prices.
   
   Overall, the state of the South African economy can have a significant impact on the property market, both from the perspective of local buyers as well as international buyers. Economic factors such as employment rates, inflation, and interest rates can influence buyer behavior and property prices, and fluctuations in the exchange rate can make South African properties more or less attractive to foreign investors.
   
   
6. Will there be any particular types of properties that you think will perform better or worse, such as residential vs commercial properties?
   Residential properties are generally considered to be a safe and stable investment, and are likely to continue to perform well in 2023. With the growing trend towards remote work and flexible schedules, there may be increased demand for properties that offer space for home offices or outdoor areas for recreation. Additionally, properties in coastal regions may perform particularly well, as more buyers look to purchase holiday homes or invest in rental properties in popular tourist destinations.
   
   On the other hand, commercial properties may face some challenges in 2023. With the ongoing impact of the COVID-19 pandemic, many businesses are reassessing their office space needs and shifting towards remote work. This could lead to decreased demand for commercial properties, particularly in city centers. However, certain types of commercial properties, such as warehouses and logistics centers, may perform well due to the growth of e-commerce and online retail.
   
   In summary, residential properties are likely to continue to perform well in 2023, particularly those that offer space for home offices or are located in coastal regions. Commercial properties may face some challenges due to the impact of the COVID-19 pandemic, but certain types of commercial properties, such as warehouses and logistics centers, may perform well due to the growth of e-commerce and online retail.
   
   
7. How will changes in technology impact the South African property market?
   Changes in technology are already having a significant impact on the South African property market and are likely to continue to do so in the future. Here are a few ways that changes in technology could impact the South African property market:
   
   

   1. 1. Virtual tours and online listings: With advances in virtual reality and 3D scanning technology, it is becoming easier for buyers to view properties remotely through virtual tours and online listings. This can reduce the need for in-person visits and make it easier for buyers to view properties from anywhere in the world.

      2. Smart home technology: Advances in smart home technology, such as smart thermostats, security systems, and lighting systems, are making homes more energy-efficient and secure. This could increase the value of homes that have these features and make them more attractive to buyers.

      3. Home automation and the Internet of Things: The increasing integration of home automation and the Internet of Things (IoT) is making it easier for homeowners to control various aspects of their homes remotely. This can increase the convenience and comfort of living in a home, and could lead to increased demand for homes with these features.

      4. Online property management and rental platforms: The rise of online property management and rental platforms, such as Airbnb and Booking.com, is making it easier for property owners to rent out their properties to short-term tenants. This could increase the demand for properties that are suitable for short-term rentals and create new opportunities for property investors.

   
   Overall, changes in technology are likely to have a significant impact on the South African property market. Advances in virtual reality, smart home technology, home automation, and online property management platforms could lead to increased demand for certain types of properties and new opportunities for property investors.

With remote work becoming increasingly popular, we expect that it will be a significant driver of the property market in 2023, with increased demand for properties that offer flexible working arrangements, good connectivity, and other amenities that support a remote work lifestyle. The growing interest in off-grid living and security will also shape the South African property market in the coming year. While coastal regions may continue to experience significant growth in property prices, it's important to consider each region's unique characteristics and factors when making predictions about the property market. Ultimately, the state of the South African economy will have a significant impact on the property market, both from the perspective of local buyers as well as international buyers. Investors who approach the market with caution and a long-term perspective could see promising returns on their investments in the years to come.

 

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