By the end of Q4 2020, confidence in the South African property market reached 80% – 4% higher than Q3 2020.
This is according to the Absa Homeowner Sentiment Index (HSI), which reveals that of those surveyed, 49% said property is a good investment, and 20% believe the property market/economy is set to improve.
According to Absa, sentiment towards buying property had its third consecutive quarter of improvement, recording 78% by Q4 2020 – the highest percentage since the launch of HSI in 2015.
Gauteng province saw a 3% increase in sentiment to 81% in Q4 2020, from 79% in the previous quarter. In the Western Cape, sentiment rose to 79%, with KwaZulu-Natal recording 77%.
“Low interest rates and property prices are drivers of positive sentiment, while property’s ability to protect wealth in an uncertain environment, and increase in value in the long term have played an important role in improving sentiment,” says the bank.
Absa expects interest rates to remain at current levels and slowly start to increase in early 2022.
The Reserve Bank Monetary Policy Committee kept the repo rate unchanged at 3.5% per annum on 25 March.
Dr Andrew Golding, chief executive of the Pam Golding Property group, says the prime lending rate remains steady at a near 50-year low of 7% with indications that it is unlikely to dip further. “For potential homeowners, it is a reminder that if you are thinking of buying a home, now would be a good time to secure an attractive interest rate.”
Low interest rates have been the biggest factor and motivator for the property market, with many first-time buyers entering the market, says Samuel Seeff, chairman of the Seeff Property Group.
“Although the interest rate has been great for property, a cut would provide an added boost. The market is currently achieving around 18,000 to 20,000 monthly transactions, reflecting that only about 3% of economically active individuals are buying property. This leaves room for growth in sales volumes, transfer duty for government and the multiplying knock-on benefits for the economy.”
2021 good for property investments
Dr Golding says despite the uncertainties surrounding the pandemic, the market for residential property has so far proven to be one of the country’s more resilient sectors.
“The sector is experiencing an earlier than expected rebound with momentum continuing in 2021, underpinned by the 50-year low interest rates.”
Craig Mott, Rawson Property Group Cape Town regional sales manager, says 2021 is the best time to invest in property thanks to low rates, subdued property prices, availability of stock and banks’ willingness to lend to qualifying buyers.
“The combination of the recently slashed repo rate and lenders’ eagerness to sign on new bondholders means a lot of applicants are going to be getting below-prime interest rates on their bonds,” says Mott.
Mott explains that with the consistent growth record over the last 50 years, property is one of the most secure and stable investments available in today’s economic climate. As a result, it is a low-risk investment choice during periods of economic volatility like we have now.
Furthermore, he says returns on property investments can be exponential over a long-term period of 10 or 20 years.
“Since the property market is currently at the bottom of a long, downward cycle, making a purchase in 2021 almost guarantees buyers the excellent growth that comes with the next upswing.”
According to Seeff, the outlook for property remains positive, and the market will remain active, driven largely by salary-earners taking advantage of low rates.
Buyers attracted to KwaZulu-Natal North Coast homes
Pam Golding Properties reports an increase of interest for properties in KwaZulu-Natal’s North Coast, with many buyers from Gauteng.
This is according Farrah Williamson, Pam Golding Properties area principal for the region, which stretches from Blue Flag Westbrook Beach to Zimbali, as well as Ballito to Zinkwazi.
Williamson says that the areas are appealing due to new schools, commercial property developments in the pipeline, a wide range of properties and investment opportunities, value for money, private beach access in some instances, security and a carefree lifestyle.
As a primary residential destination, coastal areas such as Shaka’s Rock, Salt Rock, Sheffield, Tinley Manor, Blythedale, Prince’s Grant and Zinkwazi are no longer perceived as being ‘too far up the coast’, particularly since the rapid uptake of the ‘work from home’ trend.
“These areas attract a broader range of buyers from various provinces, including Gauteng, who are looking for a permanent residence, a holiday home, a place in which to retire, or property to invest in,” says Williamson.
She explains that buyers are looking for a more balanced lifestyle and affordability, and the KwaZulu-Natal North Coast ticks all the boxes.
Data from Lightstone shows that growth in coastal house price inflation has outperformed non-coastal since Q2 2014. From January to October 2020, coastal house price inflation averaged 3.15% compared to 2.59% for non-coastal, says Williamson.
The agency says Zimbali is often the estate of choice for buyers looking to settle on the Dolphin Coast, thanks to its diverse range of facilities, including a beach, indoor and outdoor sports infrastructure, nearby sightseeing, shopping, restaurants and more.
According to Williamson, secure estates along this coastline are popular with buyers, especially those looking for freehold homes. The demand has put developers’ prices for spec homes at between R5.5m and R6m.
First-time buyers or retirees can pay around R1.8m for a home in a secure lifestyle estate, whereas those who prefer to buy land and build their own home can expect to spend a minimum of R3.5m to R4m.
Williamson says Zimbali attracts predominantly Johannesburg-based buyers, whereas purchasers in Simbithi and Brettenwood are mainly from KwaZulu-Natal and surrounds or residents from within the estate who are downsizing or have previously been renting.
“Most of our estate sales are for permanent living, with the balance for investment or leisure use – especially those on the beachfront or one road across from the beach.”
Value for money homes can be found on the Sheffield coastline in estates such as Zululami, with prices starting from R2.35m. Stands at Westbrook Beach Estate start at around R995,000, sectional title units go from R1.695m and freehold homes from R6.95m.
Edited by Gudrun Kaiser