In a period of continuing market uncertainty, players in the property market have plenty of questions going into 2019. Could a handful of disruptive trends – some driven by tech, others by economic factors – answer those questions?
Will brokers survive mobile property apps?
FNB recently introduced a mobile app, called nav» Home, which enables clients to securely and privately buy property, or sell property to buyers who are likely to qualify for a home loan. The service is currently only available to FNB clients, but – given that FNB holds about 25% of the South African home loan market – that’s still a huge pool of three million banking app customers.
‘The new functionality allows known FNB sellers to connect with known FNB buyers in a reliable, cost-saving and secure environment,’ the app’s chief imagineer, Jolandé Duvenage, said in a statement.
‘This allows us to build upon our existing home marketplace, which enables the ability to sell either through an estate agent or privately.’ While agents are available if the seller requests one, there’s an obvious appeal in limiting costs by eliminating the ‘middleman’. The impact of this app – and disrupters like it – on those agents remains to be seen.
Are growth nodes the new estates?
Two economic factors (both apparently completely unrelated to property) are driving a hugely disruptive trend in the South African property market: traffic jams and the cost of fuel. ‘With growing congestion and the rising cost of fuel reducing the distance that people are willing to travel each day, there is a strong desire to live close to work, schools and retail,’ Dr Andrew Golding, CE of the Pam Golding Property Group, noted in his recent Annual Residential Property Report. This, he said, could either be achieved by living in an estate, or by living in a growth node that offers all these facilities.
‘Instead of a single large, congested, expensive node, it makes more sense to have several smaller, less expensive nodes,’ he said. ‘There can also be a clustering of particular businesses within a particular node – such as financial services and legal companies.’ This trend is already playing out in Johannesburg, Cape Town and Durban – three major metros that have experienced burgeoning growth with the establishment of huge new nodes to their north.
‘The greater Fourways area has become greater Johannesburg’s fastest-growing centre, evolving into a mini-city in the mould of Sandton city centre,’ Golding said. ‘While Cape Town is a globally sought-after destination, acclaimed for its natural beauty, lifestyle and world-class services, the city’s well-established Northern Suburbs have morphed into what is essentially an appealing city in its own right, away from the congestion and increasing densification of the Mother City’s CBD and surrounds.
And in KZN, the rapidly expanding North Coast region, in close proximity to King Shaka International Airport and a proliferation of secure lifestyle estates, the North Coast areas from uMhlanga, Umdloti and Sibaya through to Ballito and Zimbali are increasingly in demand by home buyers from KZN and other regions.’
Will the market keep up with younger, greener buyers?
South Africa’s national housing market remains under tremendous pressure, thanks – or no thanks – to weak economic growth and an unsettled international environment. But Andrew Golding insists that there are still opportunities in well-priced housing markets, ‘particularly,’ he says, ‘those that offer an attractive lifestyle away from the congestion and stress of the major metro areas.
Certainly, the young age profile of residents of South Africa and much of Africa presents a huge opportunity, as there is a long-term structural demand for housing. South Africa is already a global leader in green/sustainable building in the commercial sector and increasingly in residential.’ A key trend in 2019 and beyond will see developers adjusting to the lifestyle requirements of buyers of niche accommodation – like, for example, student housing and retirement units.
Will digital auctions make sales more transparent?
This year will see a new catalogue of properties going up for auction through BidX1 South Africa, a JV between Pam Golding Properties and British auction house BidX1. The technology behind BidX1 – and similar online auction tools – promises to make property auctions more transparent, more accessible and more efficient than before.
‘We believe there’s a strong appetite for these advancements in South Africa,’ BidX1 South Africa Chief Operating Officer David Murphy said at the launch of the JV – and the advantage of having legal documents available for inspection via an online portal prior to auction is obviously a very attractive feature. ‘Starting from a stated reserve price, every bid placed during the sale of a property is logged and displayed in real time, and this record, along with the final sale price, can be viewed publicly on our website,’ Murphy explained.
‘In this way, buyers are assured that they are competing against other genuine parties that have completed the same process as they have. They can see competing bids as they come in and accurately assess demand for the property.’
Is fractional property the new stokvel?
Property stokvels are not new to the South African market. What is new, though, is the ‘legitimate’ spin on that old model. In a stokvel, each member contributes a monthly amount, and the pooled funds are used for the benefit of a single member who wants to buy property.
Once that member has bought their property, the next member in line is assisted to buy a property … and so on, until everybody in the group has a property. That’s not too dissimilar in spirit to fractional property investment platforms. This increasingly popular financial tool allows investors to buy a portion (or fraction) of a property, and to then collectively own the property and benefit from a share of rental income or (if the property is sold) capital returns.
Mark van Dijk