Interest rates and economic growth are two fundamental drivers of residential property sales, while a third - socio-political developments, has also become increasingly important in South Africa.
All these drivers have been overshadowed by COVID-19 over the past 20 months. Government has responded by lowering interest rates to combat the negative effects of the pandemic and lockdowns on an already moribund economy, says Hayley Ivins-Downes – Head of Digital, Lightstone Property.
"There are, however, two segments showing promise: coastal and semi-rural properties. As the hybrid and full-time work-from-home culture continues to entice buyers, so is the shift in buying behaviour.
“While uncertainty surrounds many areas of the property market, investors may be able to take refuge in this promising segment.
Where will the market go?
Some economists see the repo rate moving upwards in 2022/2023, and this will negatively impact house prices in the medium term, particularly if economic growth is not there and if socio-political conditions do not ease, says Ivins-Downes.
"Bigger homes to work from as the semigration trend gathers pace for the work-from-home lifestyle, will continue to influence property sales, especially in remote and coastal areas, where buyers are looking for larger, better-equipped homes that serve a dual purpose.
Among the country’s major municipalities, industry data shows coastal municipalities have performed better than inland municipalities. This can be partly attributed to an ongoing trend towards semigration or buying of second homes, with a growing number of people from Gauteng looking to move to the coast.
The municipal elections may also amplify or diminish this trend, depending on outcomes in key municipalities.
The housing markets in the inland provinces such as Limpopo, Mpumalanga, North-West, the Free State and Northern Cape have staged a strong comeback after the hard Covid lockdown during late March to the end of June 2020, with the Seeff Property Group noting this trend in its sales performance too.
While the data shows that house price growth is slowing, it should be noted that the inland provinces showed some of the best growth by mid-2021. These include the Free State at 7.5%, North-West at 6.3%, Mpumalanga at 6%, Limpopo at 5.8% and the Northern Cape at 5.7%, all well above the national average of 4.89%, says Seeff.
The excellent performance can be attributed to the lower price points and affordability still to be had in terms of house prices in these inland provinces. Lower price bands continue to outgrow higher price bands, according to Lightstone data.
Mpumalanga
Nelspruit
Carien Brink, residential sales manager for Seeff Nelspruit, the capital town of Mpumalanga, says their market has not only recovered to pre-pandemic levels, but demand is higher this year compared to last year and the outlook remains strong, especially from first-time homebuyers. Supply is low.
The average selling price in Nelspruit is R1.3 million, which is extremely popular with first-time home buyers, and she says many have used the low interest rate to get out of rental houses and into their own homes since the bond repayments are often similar to the rents payable.
“The most active price band is R850 000 to R1.8 million and these properties can sell within a month if correctly priced. The highest demand is for full title homes with a yard for children to play and these must be pet-friendly.”
While there are always people looking to semigrate to the bigger commercial provinces for better employment prospects, Brink says Nelspruit remains a growth centre and there are quite a few new developments. Seeff Nelspruit is for example marketing a new sectional title development priced at R950 000 for a two-bedroomed townhouse and R1.25 million for three bedrooms.
Secunda
Meanwhile Secunda, also in Mpumalanga has also seen an active market over recent months. Billy Fick, licensee for Seeff Secunda says the market has more than recovered to the pre-pandemic levels and the outlook into next year is positive, driven predominantly by the low interest rate.
Sasol keeps the town steady, says Fick. Although people come and go in the normal course of life, they are not really seeing a major exodus of people at all. Properties under R1 million are selling like “hotcakes” if priced right. New modern developments are also in demand.
There are sufficient stock levels in the higher price ranges above R1.4 million, but stock is needed below R1.2 million, which means it is a great time to sell and move up if you are in the lower price bands.
Middelburg
Meanwhile, Willemien Badenhorst, licensee for Seeff Middelburg says their market has not yet recovered. The most active price band is R1 million to R1.5 million, but agents continue experiencing challenges with stock and high asking prices. Many are also opting not to move right now, but are staying in their properties, preferring to renovate and upgrade their existing homes.
Limpopo
Polokwane
Seeff’s agents in Polokwane, the capital of Limpopo still find that the market is not quite back to pre-pandemic levels. After the spike in activity following the hard lockdown of last year, the market has tapered off again.
Property deals are often held up by high expectations on the part of sellers as current asking prices are at least 10% overpriced, which has a negative impact on the property market.
“Accurately priced stock is needed across all price ranges. There is strong demand for property below R1.5 million. Any type of property in security estates or properties with good security (freehold or sectional title) are always in demand. There is also a high demand for properties with new modern finishes,” say the agents.
Seeff Polokwane reports further that there is a trend of people semigrating from old "township" areas specifically the Bendor area in Polokwane, mostly as it is a new area (Bendor Meadows), which falls in the affordable R850 000 to R1.5 million price band.
North West
Elize van der Merwe, sales principal for Seeff Potchefstroom and Klerksdorp in the North West Province says while not quite back to pre-pandemic levels as yet, the market is improving in the area as is evident from the high volume of property enquiries coming through over the last month.
“That said, the pandemic continues to be a challenge with Deeds Office closures and delays and Municipality efficiency in terms of Clearance Certificates being processed at a slower rate.
“The outlook ahead remains positive as can be seen with growing suburbs and residential developments, she says, adding that Seeff’s exclusive development mandates continue to see excellent sales growth.
“The most active price band is R800 000 to R1.2 million, especially for first-time home buyers. There is high demand for secure estates and in Potchefstroom specifically, for student accommodation.
“Stock levels are well balanced and Seeff has a large amount of stock. First-time buyers tend to look at properties below R1 million.
Seeff anticipates further growth potential due to a new medical faculty launching in 2022 in Potchefstroom. Students and faculty staff will also be back on campus next year in the town. They are also seeing rural farmers as well as big city dwellers looking to move to smaller cities and towns such as Potchefstroom, Klerksdorp and Fochville.
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*Property24 Listings Data Disclaimer: The trends detailed in this article are based on Property24 listings, current at the time of publishing, and property transfer data supplied by Deeds offices, which typically take 3-4 months to reflect. Suburbs are listed according to Property24's geographical database. In some areas this will include both commercial and residential properties. The age demographic data of buyers, sellers and stable owners is determined over a six-month period. These Property Values should not be used as a substitute for independent professional advice and is subject to Property24.com Terms and Conditions
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