Favourable lending continues as property recovers to pre-pandemic levels

The latest market data shows that activity in the real estate market has recovered to pre-pandemic levels. Samuel Seeff, chairman of the Seeff Property Group says activity continues to be driven largely by the favourable mortgage lending conditions.

While the market has slowed compared to the second half of 2020, the primary residential market up to around R3 million (R5 million to R8 million in the upper end areas), continues to be the main story of the housing market.

The interest rate continues to be the main driver for the property market, and it remains at one of the lowest levels in close to five decades. It is largely expected that the rate will remain fairly flat for the rest of this year and into the early part of next year with any potential rate hike expected to be benign.

Mortgage lending data from our mortgage originator, ooba, shows that bank approval rates remain in the 82% range. The average deposit requirement is now down to just 7.8% as the banks compete for mortgage loans.

Seeff says further that while the low to mid-market price ranges continue attracting the highest volume of sales, there is also good activity in the upper price bands and luxury areas to around R5 million to R8 million. The super luxury market above R20 million has also seen an uptick, but predominantly in the coastal areas with the Atlantic Seaboard picking up the bulk of the sales.

Encouragingly, it appears that more South Africans are investing in high value property and there is also a resurgence in semigration, especially to the coast. Lightstone data also shows that house price appreciation for coastal property is higher compared to inland properties.

The price growth data as at mid-2021 shows that house price inflation continued to decline marginally to just under 5% nationally. The lower priced areas continue seeing the highest growth ranging from 4% to 6%. Above the R1,5 million range, growth tapers down the higher up the price scale you move.

As for the metros, the data shows that year-on-year price appreciation for Pretoria and Durban is the highest at 4.5% on average, followed by Johannesburg at 4.4% and Cape Town, the lowest at 3.4%.

What sellers can achieve in the current market varies depending on the area and price band, demand for the particular property and competing stock on the market. While there are many areas and price bands with stock shortages, it is not a market-wide phenomenon.

The market remains largely well-balanced, and says Seeff, remains weighted in favour of buyers due to the favourable mortgage loan conditions, historically low interest rate and flat price growth.

It remains one of the best times to buy in decades with sustained demand for well-priced property, but if overpriced, sellers’ risk not attracting offers during this positive phase for the market.