Plumstead & Meadowridge house price trends for 2021 and beyond
Category Market Update
Contrary to predictions following the Covid-19 hard lockdown last year, the second half of 2020 was characterised by buoyant activity in the housing market. This was driven by the historically low interest rate which saw the prime rate dropping from 10% in early January to 7% by the end of July 2020.
As a direct consequence, the dire predictions for the housing market did not materialise. Contrary to the expectation that sales volumes would decline drastically, and prices would "fall through the floor", the market surprised on the upside.
House prices did not just hold firmly, but in many areas appreciated further, especially in the lower price bands below R1,5 million. In the upper price bands, the average selling price did decline in 2020 compared to 2019, but often due to fewer high value sales which brought the overall averages down. In many instances, the market has recovered to the pre-pandemic level and with that the average prices.
In terms of actual price growth, the weakening economic climate meant that even before Covid-19 struck, house price growth was slowing. According to the FNB House Price Index, house prices grew by 4.12% in 2018 and the growth declined to just 3.1% in 2019, i.e. pre-pandemic.
The 2020-year ended with a surprising year-on-year uptick on 2019 with overall average growth in house prices of 3.7% nationally. This was largely due to buoyant growth in prices in the lower price bands on the back of high first-time buyer activity while prices above R1,5 million showed very little growth.
After the "buyer frenzy" which characterised the second half of 2020, the 2021-year has seen a slowing of market activity and consequently house price growth is slowing again. FNB noted that growth peaked in the second quarter of 2021 at 4.8%, but declined to 3.5% in the third quarter to the end of September.
The bank expects that price growth will continue to slow, but still expects to end the year with positive growth. Importantly, the higher up the price scale you move, the lower the growth.
From a regional perspective, Western Cape and Cape Town prices achieved some of the lowest growth, ostensibly as Cape Town's prices are higher compared to other metros.
According to Propstats, the average selling price for the Southern Suburbs declined in 2020 compared to 2019, but has now recovered back to the 2019-level of around R4,6 million.
At a local level, Plumstead has seen phenomenal buyer interest and properties that are correctly priced are selling quickly. More and more sales in excess of R3m are being achieved, notwithstanding that the average sale price in Plumstead over the past 12 months is around R2.4m. The average for Meadowridge stands at R3,4 million, much improved from 2020 and about 5% higher compared to 2019. Buyer demand remains strong.
The overall outlook remains upbeat for sellers, provided they price according to the current market.
As area specialists, with more than 30 years combined experience in Plumstead and Meadowridge. We have a thorough understanding of what buyers are looking for and what they are prepared to pay. We do a thorough assessment based on various factors and provide you with the best possible guidance.
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Author: Gina Meintjes
