On the back of the formation of the Government of National Unity (GNU) and steady interest rate cuts, the residential property market is beginning to recover, while the rental market is also showing positive signs.
This, coupled with a rise in semigration, means that investors are increasingly seeking tailored solutions to maximise opportunities that the property sector offers.
During COVID-19, property buyers brought forward their buying decisions as interest rates significantly decreased. "Afterwards, we entered into a cycle where demand was naturally going to decrease, because pent-up demand from COVID-19 had eased," Senior Economist, Siphamandla Mkhwanazi explains. "We then started dealing with these constraining factors from a macroeconomic perspective - low salaries falling below inflation, high interest rates and a high cost of living." Yet now the property picture is changing.
Property market recovery
"Broadly speaking, we think the residential property market has bottomed and has now started to recover," Mkhwanazi says. "There are a number of indicators that support this view, including the fact that the time it takes to sell a property in South Africa, is decreasing." This is according to our recent Estate Agents Survey.
He adds that the conventional market had already begun to recover even before interest rate cuts, as it is more sentiment-driven. Political stability from the GNU has increased consumer confidence, encouraging high-value purchases like property.
While this political shift is promising, Mkhwanazi emphasises the importance of long-term stability and structural reforms.
Financial markets have responded positively, strengthening household balance sheets. "With now lower interest rates and improved sentiment, we anticipate the balance sheet being better supported going into 2025," he says.
The affordable market remains more reactive to actual economic conditions. However, as interest rates are now steadily decreasing, market activity is expected to improve.
Semigration vs inland appeal
Mkhwanazi notes recovery in the rental market, especially in coastal regions like the Eastern and Western Cape, driven by tourism and semigration.
"Some high-value segments gained support from semigration, which now seems to be stabilising," he explains. "If the positive sentiment about South Africa holds, these pockets of opportunities will continue to benefit."
Hayden Giger, Private Product Head of Home and Secured Lending, highlights that semigration can offer families tangible benefits, but planning is key. For instance, turning a current home into an investment property can offer long-term income if rental demand is high.
"Conversely, investing in coastal properties with expected capital gains and rental income is also attractive," Mkhwanazi says. Inland, cities like Johannesburg offer good value for returning expats who anticipate growth if the GNU delivers on its promises.
Key considerations for expanding your wealth strategy through property investment
Property remains a solid long-term investment. Giger notes the importance of flexible financing tools aligned to financial goals.
Pension-backed loans as an investment tool
"Many investors don't realise the value of a pension-backed loan," Giger explains. "It's not a withdrawal from your fund, but rather your pension serves as collateral while it continues to grow." This gives access to funding while preserving retirement capital.
Securities-Based Lending: Flexibility without disruption
SBL allows clients to use their investment portfolios as collateral without selling assets. "This gives investors flexibility to pursue opportunities while continuing to build long-term wealth," says Giger.
Property as a tool for generational wealth
"Property investments provide a legacy for families," says Giger. Strategic planning and innovative financing ensure access to opportunities and support long-term financial growth.
With expert guidance, clients can leverage these tools to build a sustainable and diversified wealth strategy anchored in property.
