Breaking down annual property sales. Is now the time to buy?
Category Finance
When purchasing a home or investing in real estate, one of the most crucial aspects is understanding the market through the lens of interest rates and external factors. Whether they be spurred on by the economy or driven by social change, one thing is for sure. 2022/23 remains squarely within the buyer's ballpark while set to see rising interest rates.
Analysing the stats
South Africa's property market is dominated by the residential scene and will continue to be this way for the foreseeable future. The global pandemic played a considerable role in determining how the property market faired during 2020-2022. So to keep perspective, we will analyse the stats from 2019/20/21 and decipher how they have been affected year on year.
Note that all housing data are collected annually.
2019/2022 - A total of 94 157 households saw first-time home buyers snap up property and beneficiaries of the government subsidised housing programme. This makes sense as the resale market is generally where you'll find first-time home buyers. Read more - 2020 housing report.
2020/21 - Due to the advent of Covid 19, property sales dipped by 9.1% during these financial years. As the ratio for sellers doubled, and buyers became scarcer, housing prices began to drop to attract a larger pool of homeowners. As such, buyers became spoiled for choice regarding value for money. Despite the rise of semigration and low-interest rates, only 88 853 households became homeowners for the first time. Read more - 2021 housing report.
2021/22 - With markets and country opening up again, the era of low-interest record rates came close. While the market continues to favour the buyer, the new tipping point has become previous homeowners looking to upsize their existing property. As more people see the benefits of working from home, coastal properties with scenic views or luxury lifestyle estates offering better security for stay-at-home employees are expected to do quite well.
What does this all mean for buying property now and in the next three years?
Three critical factors to consider when analysing the current year's property market are interest rates, inflation, and previous homeowners.
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Interest Rate steadily climbs.
South Africa's Reserve Bank introduced the first interest rate increase in November 2021. Thus increasing the repo rate from 3.5% to a modest 3.75%. It was again raised by 0.25% in January 2022, making it 4%, then lurched to a familiar 8% in May. Our next important factor influenced this...
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Inflation Rising.
In the past five years, there has never been an increase in inflation to this extent. Factors beyond the pandemic, such as rising fuel prices due to geopolitical tension in Europe and a supply chain disruption, mean consumers are again forced to foot the bill.
In 2021, electricity prices increased by 14%, and our embattled power utility company, Eskom, is only set to increase these. Lower income brackets are suffering, which may lead to a dip in property growth.
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Previous Homeowners are upsizing.
First-time home buyers may now be limited in their options to purchase property. However, the above factors present a unique opportunity for savvy investors to benefit from those looking to upsize or semigrate.
Conclusion
In summary, investors may benefit from purchasing the following types of property:
Property within remote or coastal areas provides convenient access to recreational or commercial estates and, most importantly.
Property within lifestyle estates that offer owners a sense of community and improved security.
Contact Ikonic Real Estate today.
For Real Estate professionals you can trust and rely on for industry-related expertise, contact us below for more information.
If you are looking to live in Silver Lakes Golf and lifestyle Estate, Silver Stream Estate, Lombardy Estate & Health Spa, The Ridge Estate, Six Fountains Estate, or Willow Acres Estate and surrounding areas, then Ikonic Real Estate is your preferred property practitioner to assist you in all aspects of the selling and buying process.
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Author: Lisa