Seeff chairman, Samuel Seeff says much of the updraft that we have seen in the property market over the last nine months has been interest-rate induced and driven predominantly by first-time buyers taking advantage of the opportunity to get into the market.
Since around 2017, it has been a “tale of two markets”, first-time buyers versus high-end buyers with essentially only the R750,000 to R3 million price sectors driving the activity that we continue seeing in the market.
Despite what is a rather buoyant market since mid-2020, overall monthly sales volumes have only reached about 20,000 at best, which remains well below what it should be for such a low interest rate. This is due to a large sector of the market not transacting to any notable degree for some time.
Since around 2017, high-end buyers have been holding back, signaling their reluctance to invest more into the property market until they see GDP growth and demonstrable action on corruption and the State Owned Enterprises. When they do buy, they have been spending much less on real estate, possibly choosing to shift the remainder into offshore assets.
This may, however, be about to change, says Seeff. There seems to be early signs that confidence could be returning to the upper end of the market. President Cyril Ramaphosa’s recent actions against corruption both in terms of his Zondo Commission testimony and demonstrable implementation of the ANC’s “step-aside rule” has been a confidence boost.
We have recently seen more high value transactions and Seeff has achieved record-high sales months boosted by an increase in high value sales, the most recent being sales of R45 million to R55 million and more in the pipeline.
Foreign and second home buyers are also investing again, not just on the Atlantic Seaboard but in the coastal towns such as Plettenberg Bay as well. SA expats also seem to be investing in property with the intention of returning to the country.
We are upbeat about the prospects for property for the year ahead. Seeff says further that we could even start seeing the build up to a market-wide boom later this year. The interest rate remains at the current low rate for the time being and despite the rapid rise in inflation, we do not expect rate hike shocks this year. The higher inflation is Pandemic-induced rather than consumers overspending as a result of the low interest rate.
Seeff says it remains one of the best buyer’s markets in decades. South Africa is still one of the best places to live and buy property in as is well signaled by the willingness of foreign buyers and South African expatriates investing in property.
Price growth has been confined mostly to the mid to low price bands while stock levels remain well-balanced, but we do expect stock shortages towards the latter part of the year.