How has the third wave impacted the property market?
Category Market Update
The onset of the third wave of infections and enduring Covid pandemic continues to impact the economy, business and the property market for a variety of reasons.
There can be no doubt that until government's vaccination programme picks up pace and business is able to open and operate fully across all spheres, economic recovery will remain sluggish. Of course, the recent events in KZN and Gauteng would further hamper the economic recovery.
Nonetheless, property continues to be a star performer in the country, due to the five-decade low interest rate on the one hand and muted price growth which has kept prices attractive on the other hand.
The Southern Suburbs, Constantiaberg, Hout Bay and Llandudno areas are among the best performing in the country, especially in the sub-R5 million price band but also up to around the R12 million price mark.
Propstats shows that there have also been a notable number of high value sales as buyers and investors continue seeking safe haven investment vehicles, and traditionally, South African property, especially Cape Town is seen as a good store of value.
The latest data from FNB points to a slight slow-down in the market, but the Seeff Property Group remains upbeat about the market. The slower pace is likely cyclical due to winter and movement restrictions as a result of the third wave rather than a real decline in demand for property.
Seeff remains confident that there is still adequate demand in the market and stock levels remain ample to meet the current demand although this is area and price-band dependant, and it is best to consult with your local Seeff agent to get insights into the market.
Overall, well-priced property continues selling well. Mortgage originators have reported that mortgage loan extensions continue at an accelerating pace while deposit requirements are at the lowest level in ten years.
Reports also highlight that there is higher demand for bigger bonds which means sellers are taking the opportunity to sell and in turn invest in property at a lower interest rate while they can. This further supports our view that demand remains strong.
Market activity this year has matched that of the pre-pandemic levels. The news that the Reserve Bank is keeping the interest rate at the current low level further supports our view that the market remains active, but sellers will need to continue pricing in line with current sales trends.
While the recent events in KZN and Gauteng has shown that we are in uncertain times, we are encouraged by the community spirit of South Africans who have simply "rolled up their sleeves" and worked towards helping the restoration of damaged areas.
The outlook for our areas remains upbeat. The location and access to first-world infrastructure, amenities and top schools remain a competitive advantage for the property market. Additionally, the area does not just depend on one particular type of buyer but offers a broad spectrum of property to suit a variety of budgets, lifestyles and investment needs.
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Author: Gina Meintjes
