SA property in 2021 | Where is the housing market headed?
Dr Andrew Golding, chief executive of the Pam Golding Property group, comments: After the worst economic downturn in decades, further dampened by the recent tightening of lockdown restrictions in response to the second wave of the pandemic and the recommencement of load shedding, economic growth - while admittedly coming off a low base - is still widely expected to show some positive growth of around 3% this year.
Coupled with this, a number of factors are expected to continue to underpin current activity in the housing market. These include interest rates which are likely to remain at near-record lows this year, an ongoing large number of potential first-time buyers (many of whom were previously tenants but are now able to afford to purchase a property at current low interest rates) eager to gain a foothold on the property ladder, and financial institutions with a continued appetite to extend mortgages to home buyers.
That said, the more stringent lockdown restrictions potentially threaten the strength of the anticipated economic recovery, which is likely to result in an increase in our already high levels of unemployment, while rising oil prices are expected to see a significant increase in the fuel price in February and possibly thereafter - thereby creating likely inflationary impacts.
SARB expected to keep repo rate unchanged (but knocking 7 years off your bond still possible)
The South African Reserve Bank (SARB) is expected to keep repo rate unchanged at 3.50% at the next Monetary Policy Council meeting set for, with rates at historic lows and an expected modest economic recovery. But there is good news for those who want to manage their bond effectively.
Investec Economist Kamilla Kaplan says the repo rate is already at multi-decade lows and the "decline in potential economic growth is mainly driven by structural constraints, which even lower interest rates would not alleviate". "Moreover, higher inflation this year will see real interest rates turn negative without any rate hikes." This is inline with more forecasts that that rates would hiked later in 2021.
"CPI inflation is forecast to have moderated slightly to 3.1% y/y in December from 3.2% y/y in November. Deflation in the fuel price component will have had a dampening effect on headline CPI. Additionally, December is a measurement month for rentals which should continue to register slower rates of growth, reflective of the more subdued property market. This should translate to a lower contribution from the sizably weighted housing and utilities component," adds Kaplan.
Is your home priced to sell? Tips to ensure a quick sale
The property market is experiencing a boom of activity, particularly in the first-time buyers’ market. Despite high levels of interest, many parts of the country still find themselves in a buyer’s market where listings are in no short supply.
To put seller’s minds at ease, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, explains that if a home is priced and marketed correctly within the current conditions, sellers should have no trouble selling within a reasonable timeframe (provided there are no unforeseen adjustments to lockdown restrictions).
If sellers find themselves in a position where their home is taking longer to sell than others within their market, then the first thing Goslett recommends reconsidering is the listing price. Knowing your competition is crucial in this regard. As a rule of thumb, for those who hope to secure a timeous sale, a property should be priced at an average of the top ten cheapest listing prices of similar properties for sale in the area.