- The property market is expected to show more growth despite the recent lockdown and load shedding issues.
- Interest rates are still at a record low following interest rate cuts in 2020.
- The work-from-home lifestyle continues to contribute to property sales, especially in remote areas.
Following a tumultuous period for the South African economy resulting from the coronavirus pandemic and subsequent lockdowns, South Africans could be forgiven for being generally pessimistic about the future of the economy, and by extension the property market.
But following a resurgence in property sales in 2020, the SA property market continues to show signs of growth despite the pandemic and economic climate.
South African property market in 2021
The 2020 property market benefitted from pent-up demand. 2021 is not expected to experience the same major resurgence, but it will still benefit from the work-from-home lifestyle that defined 2020.
The demand for larger homes is believed to have its roots in the desire for a more comfortable working environment, as more people are forced to work from home. Homes in remote areas are becoming more desirable as the need to work from home makes the distance from city centres less of an issue.
The role of the 2020 interest rate cuts
The interest rate cuts of 2020 continue to contribute to property market growth, making property investment more viable, especially for first-time home buyers. In fact, FNB data shows that home buyers under 35 account for 43% of residential sales, a 38% increase from 2019.
Buy-to-let suffering as a result of the economy
Tenants are hard to come by in this new economic climate, leaving many rental properties vacant. As such, buy-to-let investment may not be subject to the same benefits as property sales. More home buyers are realising the cost-efficiency of a home loan versus that of a rented property.
More foreign investors
Local property buyers aren’t the only ones drawn by South Africa’s low interest rates. As more overseas buyers look to take advantage of the buyer’s market, luxury homes in high-end areas will become more desirable.
Drop in house prices
House prices are gradually falling as a result of the economic climate, meaning that the buyer’s market of 2020 continues.
Sectional title properties boosted by pandemic
The stay-at-home lifestyle has resulted in an increased desire for the sense of community that a gated estate provides. Sectional title properties will benefit as people look for homes situated in quarantine-friendly residential areas with safe outdoor spaces and efficient security.
Sustainability still an important requirement
The desire for environmentally friendly homes equipped with green tech continues to play a role in the property market, as it has for years. This is especially the case in South Africa, due to persistent load shedding; and more home buyers are looking for ways to make their home energy-efficient, or even get off the grid entirely.
While the luxury housing market continues to experience price deflation, the affordable housing market is doing a brisk trade. This may be a result of government support for first-time home buyers, like the FLISP subsidy for lower income earners. Furthermore, properties purchased for under R1 000 000 require no transfer duties.
Considering an investment?
If you’re looking to take advantage of the work-from-home trend and low interest rates; bear in mind that ooba Home Loans offer a range of tools that make the process easier. Start with our bond calculator; then use our free, online prequalification tool, the ooba Bond Indicator, to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.