Property market buoyancy remains resilient despite tough economy
Category Market Update
While the economy is under enormous pressure, the aggressive interest rate cuts this year to the lowest level in over forty years, has been an excellent boost for the property market.
Activity across the Southern Suburbs and Constantiaberg area has been buoyant, especially at the mid-market price ranges as buyers look to capitalise on the historically low borrowing costs. The recent decision to keep the interest rate unchanged and with no rate hikes on the immediate horizon should continue to support the good activity in the market.
Where analysts had expected significant price declines following the hard Covid-19 Lockdown, the buoyant activity has resulted in prices holding firmly and even ticking up by a total market average of 2.8% y/y in August, from 1.8% in July according to the FNB Property Barometer.
The bank also reports that properties are currently selling at some of the fastest rates in recent years, being within 11 weeks on average compared to 14 weeks in the second quarter.
The positive market sentiment is mirrored in the Wynberg Area and surrounds up to R3.5 million where properties are moving quickly, driven predominantly by first-time buyers looking to take advantage of the low interest rate. Sellers in this range are equally taking advantage of the opportunity to upgrade to larger properties.
Properties in the price band above R4.5 million are, however, proving slower to sell in the current market. This is in part due to the high competition in the market from surrounding suburbs where the properties offer more value for money in terms of size of land and homes. Serious sellers may need to relook their pricing if they want to take advantage of the demand in this market.
Due to a very successful run of sales in the price band between R2.3 million and R2 9 million, there is currently excellent opportunities for sellers, and I need more stock to meet the buyer demand. The emphasis is on secure off-street parking which is always a challenge and a bargaining chip.
On a cautionary note, we are in uncertain times and the full effect of the lockdown is expected to only be felt as the year unfolds. FNB has for example warned that while the data currently supports a "V" shaped recovery, we could well see "W" shaped recovery. That means that, after the initial exuberance coming out of the lockdown, there may well be another dip before heading back into recovery mode.
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Author: Gina Meintjes
