SA Property Trends to Keep on your Radar
Andrea Tucker, Director of MortgageMe explains the biggest trends making an impact right now in the South African property market.
14/12/2022
Shifts in human behaviour across the
globe and changing lifestyles and work patterns
are creating massive waves in property markets
everywhere. In South Africa, more dynamic
work/home models that are the legacy of the
coronavirus have resulted in a buyers’ market
for both residential and commercial properties.
Andrea Tucker, Director of MortgageMe explains
the biggest trends making an impact right now.
Although interest rates that dropped
significantly during lockdown have increased
repeatedly over the last 12 months and thereby
returning them to pre-pandemic levels, the home
buying market remains largely buoyant across the
entry-level/affordable segment, mid-price range
as well as the luxury home sector.
At one end of the ‘reasons for selling’ scale are financial pressures on households from job losses and higher than anticipated living costs as a result of inflation; as a result, individuals and families are looking to consolidate their spending and reduce overheads by downsizing their homes if this makes financial sense for them in the short and medium term. On the other end, higher levels of affluence from people who both retained their jobs and were able to save money over lockdown by not commuting to the office, and by the curtailment of leisure activities including entertainment and holiday spend are creating markets for larger homes. The extended work-from-home policies of many companies and the proliferation of new, small home-based businesses are adding to this demand for space that can comfortably accommodate both family and work.
Outside of the movement in the
markets of major cities including Durban, Cape
Town and Johannesburg, we are also seeing an
increase in relocation to peri-urban and
semi-rural areas. With remote working being
increasingly acceptable and digital natives
connecting from anywhere, greener suburbs are
sought-after areas. Easier access to the great
outdoors, more space and play areas for
children, walking and cycling routes are all
part of buyers’ specs, as well, in some cases as
off the grid installations such as solar power
and grey water collection.
In addition,
emigration and semigration are still impacting
many decisions to move – South Africans either
leaving the country or moving mostly from
Gauteng to the Western Cape in favour of coastal
living. This has resulted in many more
properties coming onto the market, and supply /
demand economics coming into play as a
consequence.
Now is clearly a good time
to be looking for property with the wide range
of stock in all price segments on estate agents’
books. A competitive lending environment is
contributing to the current movement in real
estate and making this largely a buyers’ market.
However, in the current difficult economic
climate in which we – and the rest of the world
– find ourselves, buyers must be careful not to
over-extend their budgets by purchasing a
property outside of their affordability range.
Even a percentage increase in interest rates can
adjust bond repayments significantly and with
the burden of higher costs of living on
everyone, caution in jumping into a new house
purchase is advised. Fitch Ratings forecast
South Africa’s headline inflation to remain
above the South African Reserve Bank’s (SARB)
target range until late 2023. As the country’s
inflation rate is expected to remain high,
questions remain about whether SARB will raise
its policy rates again or take a pause with
Fitch suggesting that SA’s interest rates could
be increased well into 2023 to cool rising
inflation.
Investing in bricks and mortar
if done wisely, is generally a sound decision
with a long-term lens. With the correct advice
from lenders and real estate agents, buyers can
find, if not a bargain, then a great opportunity
for economic security and future wealth.