The biggest driver of South Africa’s healthy residential property market is undoubtedly the current low-low interest rate. Quite simply, it brings the cost of financing a home within reach for many first-timers and young people who wouldn’t otherwise be able to afford a bond.
But in fact, there are two historic lows in play right now: The first is the prime lending rate, and the second is the number of buyer viewings completed per accepted offer to purchase.
Leadhome Properties’ data shows that the number of buyer viewing appointments that need to be completed for every offer accepted is currently sitting at 15.3 viewings, compared to 20.6 viewings in August 2020 and an average of 20 in 2019. We are at a historic low! This means that property sellers are benefitting from the wealth of interested parties looking to snap up a home, and are able to complete transactions quickly and with minimal inconvenience. In even simpler terms, if you’re thinking of putting your property on the market, you’re more likely than ever to sell it fast – especially, but certainly not exclusively, in the R700,000 to R1.5 million bracket. Great news!
More great news, especially as we observe Youth Month, is the fact that younger home buyers are coming to the table more prepared for the application process than previously.
South African youth are becoming more educated in financial matters and more empowered with information, which in turn generally leads to better decision-making. It’s safe to say that most young people entering the property market have done their homework with regards to their needs and income versus affordability. According to bond originator Bondspark, while there is still a need for more education for younger buyers, this demographic is more likely than before to have been pre-vetted for a bond, which also contributes to the speed at which a property transaction can be concluded.
And it seems that the banks are also coming to the table: In 2020, banks were lending above prime to 70% of bond applicants. However, in the first quarter of 2021 there was an increase to just over 40% in the number of bonds being granted at below prime rates. There has also been a marked increase in the number of bonds being granted over 25 and 30-year periods, rather than the traditional 20-year period, with stats showing that younger buyers are benefitting the most.
Sellers who want to have their cake and eat it too can capitalise on these market conditions by working with Leadhome Properties. Essentially, 93% of our agents’ transactions fall within 10% of our valuations; 85% of properties on our books sell at the listing price; and our properties sell 33% faster on average. This speed, combined with our low, fixed-fee pricing model ensures that sellers who list with Leadhome Properties’ agents get more out of a deal.
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