This is how the property market of South Africa changed at the beginning of 2021!

 

In 2021, demand for holiday homes at less than R2 million is forecast to remain "very lively," so Gerhard Kotzé, Managing Director of the RealNet real-estate agency group.

This demand is supported by a large number of first-time purchasers and repeat purchasers from more expensive properties, he said. properties for sale

"However, in the light of growing concern about labor stability, we can see the actual number of transactions in this bracket start slowing as the banks start lending more cautiously.

"We already have the number of bond approvals dropping from the July and August 2020 highs and fewer subsidies for 100 percent home lending. Particularly worrying is the potential for large-scale restraints this year for large private sector companies and the public sector.

'Therefore, we expect price growth and possibly even real price growth (after inflation) this year on the R2m market due to constantly tightening inventory constraints, especially on the lower end of the sector.'

Kotzé said the second tier of the market – between R2,5 million and R4 million – will face fairly strong headwinds and should be listed at an earlier stage by owners in the sector who have to sell their homes.

"We predict that consumers with mid-income numbers will reach a difficult 2021 with debt alleviation measures coming to an end, minimum pay increases expected and the costs of everything from education and medial aid to electricity, water and transportation will increase as usual."

In addition, in February, some R5billion in income tax increases are expected to be announced.

"The number of homeowners selling to relieve financial pressures can therefore be expected to increase and the number of distressed sales will also increase. This will add to the inventory available in this category and reduce prices.

"Homes sold by the bank's distressed seller schemes are now generally only 85 to 90 percent worth, as compared with an average of approximately 95 percent in early 2020. We expect them to be as low as 80% of the value."

Market of Buyer

This will offer buyers great opportunities, but also allow many distressed vendors to still pay off quite a lot of their outstanding home loans, even after their real estate has been sold, Kotzé said.

"While their credit record will be kept, this will interfere with their financial ability to secure a different property or even a rental house, so again we would urge anyone to sell it now without delay."

Looking at the rental market, he said rentals will likely have very low growth (if any) because of the current combination of high vacancy rates and economic pressure on tenants - and that most rental agents and landowners are likely to apply ever more stringent credit and rental record controls. Requirements for deposits are also likely to increase.

"A very large number of good tenants have become homebuyers in 2020 due to lower interest rates, and, in addition, landlords have had to face large non-payment problems due to the economic consequences of the Covid19 pandemic and lock-down, so when it comes to new tenants, they are already very cautious.

"And unfortunately a large number of people who are probably looking for properties are now people who already have financial problems, so it will be necessary to be more careful and to get assistance from professional rental agencies."

Alternatively, Kotzé said that many of the rental owners are probably just going to choose to sell their portfolios now, so clever and rapid investors who have the means to purchase should look for "negotiated" homes and townhouses to reach their local markets.