This week's announcement that GDP had plummeted by 51% quarter-on-quarter, mostly due to the lockdown and the implications that this had on economic activity - might come as no surprise, but the appetite for luxury properties just might.
The current market conditions continue to spur market conditions that are especially beneficial to the property market - at least in some sale price brackets. South African interest rates are at their lowest in over 50 years, as the prime lending rate is now 7% - making it the great time to buy property.
SEE: How interest rates work | And how likely are they to go up in the near future?
Investec industry analysis expect the repo rate will remain unchanged at 3.50% to guard against "increased CPI inflation back towards the mid-point of the target range next year". However, it says "the worse than expected GDP outcome for Q2.20, and the threat to a subsequent recovery from the electricity supply disruptions, a further reduction in the policy rate cannot be precluded."
The environment as such remains highly attractive for high net worth buyers, with interest not only coming in from usual investors such as the UK, Europe or the rest of Africa but now includes "Chinese, UAE and US buyers.”
This is according to Dr Andrew Golding, chief executive of the Pam Golding Property group, who says sales over the years to foreigners have been to buyers from virtually every country around the world.
'Luxury defined as R5 million up to R100 million and beyond'
And yet adds Golding, the "luxury residential property market, which spans from approximately R5 million up to R100 million and beyond in rare instances, remains predominantly a local market, with foreign buyers comprising only around 1% of total sales in any given time period".
SEE 'Luxury coastal property boom' as Atlantic Seaboard apartment sells for R41.4m
“Since real estate transactions were allowed to resume under Level 3 lockdown, our franchise has concluded 111 sales with a combined value of R206 million,” he says, "a 47% increase on the same time last year, and an incredible rebound after a long period of subdued market activity.”
"Residential stock levels have dropped by 4%, suggesting a slow reversal of the previous oversupply trend. Buyer enquiries have also remained constant, putting paid to concerns that the boost in activity may be a short-lived reaction to lockdown’s restrictions," says van der Merwe.
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- Johannesburg, primarily the Sandton area – suburbs include Hyde Park, Sandhurst, Westcliff, Houghton, Saxonwold and Atholl, as well as Fourways.
- Cape Town, notably the Atlantic Seaboard but also Bishopscourt and Constantia.
- Durban and uMhlanga – notably uMhlanga, La Lucia and Ballito – including Zimbali Coastal Estate on the KwaZulu-Natal North Coast and Sibaya Coastal Precinct near uMdloti. The suburbs of uMhlanga and Ballito are two of the fastest growing areas in South Africa in terms of wealth growth over the past decade.
- Paarl, Franschhoek and Stellenbosch in the Cape Winelands (Boland region), which together form one of the fastest growing areas in South Africa for HNWIs.
- Menlyn Maine in Tshwane metro in Gauteng, which offers secure, lock-up and go living and a bespoke concierge apartment lifestyle. The precinct caters for entertainment, shopping and 5-Star dining. The easy transport to and from the airport is appealing and no car is necessary once in the precinct.
“There is a marked trend towards gated communities - in fact, residential estate living has been attracting interest for many years. New World Wealth estimates that as many as 40% of South Africa’s high net worth individuals live on residential estates. especially those with International Schools in the estate or in the near vicinity.
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“The luxury market - and the residential property market in general - in South Africa is currently at its most competitive pricing in over a decade, so this is an excellent time to secure a well-priced property in international terms. I anticipate that the luxury property market is going to see a lot more buyers considering these types of homes as quality of life and affordability take precedent when they are considering their next residential purchase,” says Golding.
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