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Thursday Jul 29, 2021

Property slowdown could be a boon

The property industry in South Africa could be nearing the start of a downturn. Shaun Rademeyer, chief executive of Multinet Home Loans, says this is due, in part, to the latest Covid-19 wave coinciding with winter.

"We have seen a slowdown in (new bond) submissions over the past two months as the third wave of Covid-19 takes its toll on the country.

"We also know the winter months, including school holidays, generally influence the residential property industry, and so this could be the start of a downturn."

While consumers can still take advantage of the low cost of borrowing, he notes that the high unemployment rate and low consumer confidence could have a negative impact on the property boom which began after the hard lockdown of last year.

International property markets are also experiencing higher-than-normal price inflation leading to potential property bubbles.

"The slowdown in the South African property market and a potential interest rate hike at the end of 2021 could benefit first-time homebuyers able to negotiate a more favourable property price."

LATEST PROPERTY TRENDS

In terms of trends, Rademeyer says bonded properties registered in the past six months have shown a 6.64% average growth, but as Gauteng shows the lowest growth percentage of all the provinces at 4.5%, this could indicate a "higher amount of interprovincial movement because of the new work-from-home environment we find ourselves in".

In the space of a year, says Kay Geldenhuys, head of sales fulfilment at ooba Group, buyers have substantially changed their criteria for an ideal home.

"Initial lockdowns forced a major portion of the workforce, as well as scholars and students, to work or study from home.
And, for a large proportion of the population, this has become a semi-permanent or permanent arrangement. Consequently, buyers are prioritising quality of life and new ways of working when purchasing a home."

Properties that feature separate workspaces, reliable internet connectivity and more space for families spending more time at home are in demand.

Also, buyers are finding bigger properties at better value for money in suburbs outside main CBDS, she says.

"Areas that were once viewed as potential holiday home destinations are now more soughtafter as permanent residences as opportunities to work and study remotely, while enjoying a better lifestyle, have increased."

INTEREST RATES STILL FAVOURABLE

Interest rate are stable at their lowest levels in 60 years, says Kevin Mountjoy, director of Bond Gallery. There is "huge demand" for property, especially in the lower-to-middle markets up to R1.8 million. And first-time buyers make up 48% of all home buyers.

"There is an increasing demand for residential properties, especially in gated estates and sectional title/cluster complexes in the middle price range of R800 000 to R1.8m."

Yet, while most of the activity in the past year has been at the lower end of the market, Carl Coetzee, chief executive of Betterbond, says buyers in all price bands are starting to take advantage of the low interest rates.

"We have seen a 36% increase in approved bonds for homes between R2.5m and R3m and a 31% increase in bonds for homes of over R3m for May year-on-year."

Sunday Tribune 25 Jul 2021 BY BONNY FOURIE bronwyn.fourie-AT-inl.co-DOT-za

    
 

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