There seems to be an unusually sustained market trend emerging, as South Africans seem to be buying property “as if it is a Black Friday sale”, says Samuel Seeff, chairman of the Seeff Property Group.
“Where we had initially feared that the pent-up demand would only last for the June-July period followed by another market dip, we have now seen the momentum continue for the fourth successive month. Many areas are achieving the highest sales turnover in years. Seeff has just had the best October sales in almost six years,” he says.
Seeff believes the momentum is sustainable and will carry well into 2021.
“Key to this, is the unbelievably favourable interest rate, the best in about fifty years,” he says. “Property is significantly more affordable with lower qualifying thresholds on the one hand, and for upwardly mobile buyers, the ability to take bigger home loans and buy a bigger home or move to a better neighbourhood.”
The market remains driven by the low to mid-price segments to about R1.5-million and up to R3-million in some areas, and largely with buyers who need home loans. These are predominantly buyers with fixed incomes who are not particularly affected by the COVID-19 pay cuts, which was observed in industries such as tourism and more informal sectors.
“Buyers continue flocking to the market to take full advantage of the low interest rate and favourable bank lending climate. Approval rates are still at over 80% and some two thirds of buyers are still securing full or close to full bonds,” says Seeff. “In many areas, property is more affordable than renting. A R1.5-million property would, for example, only cost you around R12 000 per month on a bond compared to a rent of about R14 000.
“Aside from the massive influx of first-time buyers, we are seeing buyers across the board taking advantage of the market. Above R3-million though, buying remains more selective and sellers will need to continue ensuring that their property offers the best value as buyers are negotiating strongly.”
Seeff says further that inflation continues dipping, being down to 3% for September and now at the bottom of the Reserve Bank’s target range.
Inflation is at the lowest level since 2004/5 and less than half of what it was following the 2008 Global Financial Crisis when it spiked to over 10.99%, before going down to 7.12% in 2009.
“At the very least, the low interest rate should remain until late into 2021 and Seeff therefore expects the momentum in the market to be sustained into late 2021. We have a well-balanced market. Usually, we would expect that this level of activity would result in stock shortages, but the market is still adequately stocked. That means that prices are not running away, and buyers are still able to take advantage of the favourable interest rate and bank lending conditions,” Seeff says.