The current state of the housing market in SA remains a buyer’s dream. Here, we take a closer look at the effects of the Covid 19, where there are positive trends, where the economy has suffered, and the unique situations presented by such a novel event.
What are the facts?
One of the key trends that have carried over from 2020 is an extremely successful seller’s market. However, with a near 50-year low-interest-rate recorded, the best time to sell property may have already come and gone. Houses are expected to see a massive downward tick in prices by the end of the year with costs expected to dip as low as 2.2% on the previous year’s average. This will be the first annual drop since the housing crisis of 2008/09.
Our agents have confirmed that the most affected homes lie between the R1 to R3 million range with the drive focusing clearly on location. It’s no secret that with the current interest rates being so low, South Africans are waking up to the opportunity to invest in the property market or upscale on existing investments. Leadhome Properties’ customer enquiry platform has seen an uptick of enquiries up to 5% with the inverse in the seller’s index showing to be a three year low.
“Semigration” in 2021
Simply defined as people moving from one part of a country to another, this phenomenon has once again taken shape within the South African property sector. Marcél du Toit, Leadhome Properties CEO, explains that this is a factor that has seen the environment develop into a buyer’s market due to sellers scrambling to secure sales.
This leads to people looking to expand on their living space in anticipation of lockdown requirements keeping them home for longer than ever before. People have shifted away from living in city centres and “semigrated” towards suburban areas to accommodate these spatial requirements. This, coupled with the interest rate, laid the foundations for the boom we have seen in the property buyer’s market.
“It’s safe to say that the property market is buoyant, even in an economic environment that continues to be volatile,” notes Marcél.
Leadhome Properties’ analysis concludes that this trend bucks both ways, as, although people are moving into larger spaces, others are feeling the burden of economic pressures forcing them to downscale as a result.
A wider look at sector recovery
External financial research firms’ data analysis concludes that out of all the property sectors, the commercial zone continues to struggle with office spaces performing the worst. Mainly due to the slow growth of employment, the commercial sector also relies more closely on ties to the economy than interest rate fluctuations.
On the other end of the spectrum sits the industrial sector, which experts claim to be highly optimistic. Part and parcel due to more affordability in this sector, one of the driving factors remains the interest in online retail as ultimately more warehouse and logistical space is needed to suit such demands post lockdown.
Despite this, the retail sector continues to suffer a loss of 27.5% year-on-year. This loss is attributed to social distancing requirements in-store and a severe dent in consumer buying due to 2020’s recession.
Future reflections
The slow recovery rate of the economy is likely to lead to an increase in the number of home sales which will continually pressure the price downward throughout the year.
Until the pandemic’s infection rate subsides, we expect a continuation of consumer focus on home improvements and renovation over travel or leisure expenses. This general attitude plays into the unique success experienced by the buyers’ market. Leadhome Properties continues to innovate within this sector and we will observe a growing window of investment opportunity.
Read more:
https://www.property24.com/articles/why-it-really-is-a-buyers-market-right-now/30277
