How Global Events and Trends Impact the Local Real Estate Market

Antonie Goosen, founder and principal of Meridian Realty, explains how global events and trends influence the South African real estate market. Understanding these impacts is crucial for investors and homeowners to navigate the market effectively.

1. Economic Fluctuations and Interest Rates:

"Global economic conditions significantly affect the South African real estate market," says Goosen. "Economic downturns or recessions in major economies can lead to decreased foreign investment and a weaker rand, impacting property prices and affordability. Conversely, economic growth in key regions can boost confidence and increase foreign investments in South African real estate."

Interest rates are a critical factor. "Global economic policies, particularly from the US and Europe, influence local interest rates set by the South African Reserve Bank (SARB)," Goosen explains. "Lower global interest rates can lead to lower local rates, making home loans more affordable and stimulating property demand."

2. Exchange Rate Volatility:

"The exchange rate of the rand against major currencies like the US dollar and the euro plays a pivotal role," Goosen notes. "A weaker rand can make South African properties more attractive to foreign investors, leading to increased demand, particularly in high-end markets like Cape Town and Sandton. However, it can also increase the cost of imported building materials, affecting construction costs and property prices."

3. Political Stability and Policy Changes:

"Global political events, such as elections, trade agreements, and geopolitical tensions, can impact investor confidence," says Goosen. "Political stability in South Africa and favourable policies toward foreign investment are essential for maintaining a healthy real estate market. Uncertainty or negative perceptions can deter foreign investors and slow market growth."

4. Technological Advancements and PropTech:

"Advancements in technology and the rise of PropTech are shaping the real estate landscape," Goosen observes. "Global trends in smart home technology, virtual reality property tours, and blockchain for secure transactions are increasingly adopted locally. These technologies enhance the buying, selling, and renting experience, making the market more efficient and attractive."

5. Climate Change and Sustainability:

"Global awareness of climate change and sustainability is influencing property markets worldwide, including South Africa," Goosen explains. "There is growing demand for eco-friendly and energy-efficient homes. Properties with sustainable features like solar panels, rainwater harvesting systems, and energy-efficient designs are becoming more desirable, reflecting a global shift towards environmental responsibility."

6. Migration and Urbanisation Trends:

"Global migration and urbanisation trends impact local real estate markets," Goosen notes. "Increased urbanisation, driven by job opportunities and lifestyle preferences, boosts demand for residential and commercial properties in major cities like Johannesburg, Cape Town, and Durban. Additionally, international migration trends can affect demand for different types of properties and influence rental markets."

7. Global Health Crises:

"The COVID-19 pandemic is a prime example of how global health crises can impact local real estate markets," Goosen highlights. "The pandemic led to changes in property preferences, with increased demand for homes with office spaces and outdoor areas. It also accelerated the adoption of digital tools in real estate transactions. Future global health events could similarly reshape market dynamics and consumer behaviour."

8. Trade and Supply Chain Disruptions:

"Global trade dynamics and supply chain disruptions can affect the local real estate market," says Goosen. "Delays in the import of building materials and rising costs due to trade restrictions or global shortages can impact construction timelines and property prices. Investors and developers need to be aware of these potential challenges."

9. Tourism and International Travel Trends:

"Tourism is a significant driver of real estate demand, particularly in regions like the Western Cape," Goosen explains. "Global travel trends and tourism levels directly affect the demand for short-term rentals, holiday homes, and hospitality properties. A rebound in international travel can boost these market segments, while travel restrictions can dampen demand."

In conclusion, Goosen emphasises the interconnectedness of global events and trends with the South African real estate market. "From economic fluctuations and exchange rate volatility to technological advancements and climate change, these factors play a critical role in shaping market dynamics. Staying informed about global trends helps investors and homeowners make strategic decisions in the local real estate landscape," says Goosen.