Trends you should know about in South Africa’s residential property market – current and into 2021 | Simply Online

Blog

Trends you should know about in South Africa’s residential property market – current and into 2021

...

With the easing of the hard lockdown, and moving forward, the 50-year low interest rates coupled with the zero transfer duty payable on properties up to R1 million has fuelled high interest and significantly increased activity among first-time buyers – some of whom were formerly renting but now find affordable and appealing opportunities to gain a foothold on the property ladder.

This is according to Dr Andrew Golding, chief executive of the Pam Golding Property group, who said that in the current environment, millennial buyers can get into a property or suburb that they might not have been able to afford a year ago.

According to FNB, data from the Deeds Office shows that younger buyers (below 35 years) now account for 43% of residential sales – up from 38% in 2019.

With a population of predominantly ‘young’ buyers, the increasing demand for accommodation to buy is helping drive activity in the residential property market, with a ripple effect upwards across all sectors of the market and even creating stock shortages in high-demand areas.

If managed correctly, apart from enabling security of tenure going forward, homeownership is one of the best ways to create wealth and, in South Africa, plays a critical role in economic transformation, the property specialist said.

According to Lightstone, most first-time buyers enter the residential property market in the R700,000 – R1.5million price band, rather than in less expensive valuation bands; both first-time and repeat buyers mostly want three bedrooms and two bathrooms; and women make up most of the first-time buyers while men make up most of the repeat buyers.

Sectional title and estate properties are particularly appealing to female buyers as they tend to offer better security and this steady rise in women’s buying power is reshaping the local property market.

According to Ooba, the percentage of first-time homebuyers has been rising steadily since late-2007 (available data) with a clear acceleration in the percentage of first-time buyers in recent months – briefly reaching a record high of 56.2% in May this year – with the underlying trend remaining upward.

Ooba also noted the approval rate for first-time buyers has averaged 80.1% from January to October 2020, which compares to an average of 80.0% during 2019 as a whole. In 2016, the approval rate for first-time buyers was just 68.5%, reflecting a marked improvement in recent years.

Positively for home buyers, the deposit that financial institutions require from both first-time and repeat buyers is declining. For the year to date, the deposit – as a percentage of purchase price, for first-time buyers has averaged 7.0% while for repeat buyers it has averaged 9.03%, Ooba found.

Loan applications for 100% bonds have risen steadily in recent years, reaching a peak of 67.5% in June 2020 before easing back to 62.5% in October, with the approval rate for 100% applications being 80.4% during the 10 months January to October 2020.


Work from home:

Historically, ‘working from home’ segmented people into roughly three categories; the self-employed professional, the young start-up, and the cottage industry entrepreneur. For almost everyone else in an established business or the corporate world, it meant a daily, costly, time-consuming commute to an office.

Lockdown was a social disrupter but also gave rise to a new approach to how we work and more importantly, where we are most productive.

While manufacturing and hospitality industries have no choice but to centralise, many people are now presented with promising options. Underutilised spare rooms are being redesigned as working hubs. For young professionals and first-time buyers, a sectional title unit with an extra bedroom, is likely to be an attractive choice.

For families, a freehold home with good Wi-Fi connectivity in a peripheral area, retirement village or a country estate, solves the dilemma of choosing income generation over quality of life. 


*Article sourced from Business Tech*