The lockdown has affected the various price brackets within the property market differently. While the first-time buyers’ market is booming, the luxury market is feeling the pressure within Alberton and Germiston in Gauteng.
According to Luc Delys, Team Leader of Team Blade at RE/MAX All Stars that operates in these suburbs, buyers in the lower-end of the market are finding interest rates favourable which is helping them qualify for home finance. “But, on the top end of the pricing scale, buyers tend to be more conservative. The uncertainty in the markets with job losses and the potential of future interest hikes is concerning for these buyers,” Delys explains.
These reactions to the current economic conditions has had an effect on how long it takes to sell in these areas. Taking the year 2020 so far, Delys explains that the average property is taking just less than three months to sell within the Alberton and Germiston areas. “In our experience, time on market has decreased since real estate could operate again in June 2020. The average time on market for properties priced up to R 1,5 million has dropped and in some cases, it is taking only days to sell. Average time on market within the R2 million price segment seems to have been unaffected throughout 2020, however in the upper house price bracket, it is our experience that the average time on the market is certainly creeping up,” he says.
Delys also explains the effect the lockdown has had on the rental market. “In the lower end of the market, property owners are not generally selling in order to rent. Within this price segment, rentals are roughly at the same rate as paying off a mortgage and some are even more expensive than to purchase. But, in the high-end market, we can see that there are and certainly will be more property owners that decide to sell their properties and take up a rental option,” states Delys.
Beyond this, the team at RE/MAX All Stars believe that there will also be a surge in properties brought onto the market in the next three months or so; reason being that many property owners initially took advantage of the three month mortgage freeze that many financial institutions offered at the beginning of lockdown and must now return to their payments.
“In any economic downturn, opportunities exist. The current opportunity exists in the interest rates that are at an all-time low. South Africa and our markets will recover over time and the effects of COVID-19 will dissipate too. However, the road to recovery is not going to be a sprint, but rather a marathon. Patience and diligence will need to be the order of the day,” says Delys.
According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, the negative state of the economy is likely to lead to an increase in the number of home sales which, in turn, will hinder property price appreciation. “Until our economy recovers from the current pandemic, I predict that house price appreciation will remain low for 2021, reflecting a national average of roughly between 2-3% growth YoY. However, over the long-term, house price appreciation will strengthen, and homeowners will stand to benefit greatly for their choice to enter the property market now while prices are pegged back,” Goslett concludes.
