Signs point towards continued market recovery even without an added interest rate cut - however sought-after homes priced below R2.5 million are seeing some stiff competition from buyers.
Rawson Property Group says it has seen three consecutive months of exceptional performance in what has been one of South Africa’s most economically challenging years in recent memory.
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“The current surge in market activity is due to the combination of record-breaking low interest rates, excellent value for money on offer, and very motivated lenders offering up to 100% bonds to qualified buyers,” says Tony Clarke, MD of the Rawson Property Group.
“We don’t foresee those conditions changing for several months at least. In fact, interest rates will likely drop again as we head into the new year, and only start to rise very slowly late in 2021 – nothing dramatic enough to offset the currently favourable buying conditions," says Clarke.
'Decreasing supply'
As market momentum continues, however, Clarke says property prices will begin to climb – a natural reaction to the increasing demand and decreasing oversupply.
“We’re also hoping to see improvements in the economic growth rate, which will boost income, affordability and consumer confidence. All of this will contribute to the already high demand for properties, particularly within the low to middle price ranges, and help support stronger price growth in the months to come.”
Richard Day, CEO of Eazi Real Estate agrees, as the agencies is seeing competing buyers in some instances pushing up asking prices, especially in the sought-after R2.5 million price band.
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“Not only are asking prices in this price band readily being achieved, they are also sometimes being exceeded, with these high demand properties selling in one or two days. This is occurring where buyers are submitting competitive offers, resulting in properties being sold for above the asking price.
Day says they have also concluded a few linked sales, where owners are upscaling and therefore not only selling their property but also buying bigger properties.
'Strong demand for affordably priced properties'
“Notably, and not surprisingly given the economic impact of the lockdown, we are seeing a strong demand for affordably priced properties, especially those realistically priced in the price band up to R1.5 million.
“Interestingly, and probably as a result of the lockdown restrictions, in the sectional title market we are seeing a trend towards homes with gardens as outdoor space is considered increasingly appealing,” says Day.
Digitally strong footprint
Both agencies attribute being digitally ready to embrace the difficulties brought on by the Covid-19 lockdown.
Having won awards for their future-focussed technology in the past, the Rawson Property Group says it was better positioned to adapt to the coronavirus’ new normal. According to Clarke, being able to leverage this familiar technology to engage with buyers, sellers, landlords and tenants safely and effectively, from a distance, has been instrumental to their franchises’ success over the last few months.
Perhaps even more importantly, he says these virtual tools have laid the foundation for a more efficient, convenient and flexible property experience moving forward.
“Forced change is never easy, but it can be for the best,” he says. “We may have embraced tools like virtual show houses, 3D tours and digital paperwork by necessity, but these services have also made us a more attractive, adaptable, future-proof brand.”
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“Given our business model and technological capabilities, we were well-positioned and ready for lockdown as our online systems were already in place, which meant we could adjust quickly and easily to the new regulations.
"Our offer and administration process has always been online, and going forward, more and more buyers and sellers are benefiting from this capability. They are already finding value, judging by the number of 5-Star reviews we’ve received on Trustpilot,” adds Day.
'Sellers warned to remain pragmatic'
In the meantime, however, Clarke cautions sellers to remain pragmatic when it comes to pricing.
“Growth is on the horizon – the market is full steam ahead – but it’s important not to pre-empt pricing conditions. Buyers and tenants are well-informed and spoilt for choice. They’re not interested in properties that aren’t appropriately competitive,” says Clarke.
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