Where 2020’s property market was driven by first-time purchasers, 2021 was characterised by a return to market from existing property owners.
This is according to Tony Clarke, MD of the Rawson Property Group, who says that first-time buyers were quick to leap at the chance affordable finance gave them to get onto the property ladder in 2020, but existing homeowners were more cautious about making changes during the first year of the pandemic. Many believe this was influenced by a reluctance to sell their current homes during a buyers’ market. “Personally, I think maintaining stability during a very uncertain period also played a big role.”
After taking 2020 to get comfortable with the ins and outs of a post-COVID world, homeowners hit the market in full force during 2021, says Clarke.
“We do have some sellers driven by financial distress, but the vast majority are now looking to upgrade to homes that better support their new lifestyles. More living space, better entertainment areas and comfortable home offices are highly prized as we adapt to spending more time at home with our friends and families.”
'Flexibility to work remotely'
Although things might level off a bit, it by no means will turn down, the growth in property prices and trends like first-time homebuyers joining the property market will continue, says Antonie Goosen, principal and founder of Meridian Realty.
Goosen says if the prime lending rate stays at the current levels, and employers continue to give the flexibility to work remotely, there will be continued demand for home buying. “Also, the ability of some to work from anywhere and the pursuit of a better work-life balance, will allow for the trend of people opting to relocate their families out of cities to smaller towns to continue in 2022. Housing stock shortages in the preferred new places will then also continue.
'Interest rates rise expected in late March 2022'
He adds that "with the SA Reserve Bank (SARB) recently hiking the repo rate by 25 basis points to 3.75%, placing the prime lending rate at 7.25%, the first repo rate hike in nearly three years, there will be some pressure on homeowners, but it would be premature to increase rates again in 2022".
“We expect a slow rise to kick off in Q2 2022, with two or three small, incremental increases over the course of the year,” says Clarke.
“We don’t expect this to have much impact on demand at this stage. Consumers have proven very resilient and their confidence in property as an investment remains strong.”
Lenders, too, are expected to remain bullish in 2022, with up to 105% mortgages likely to be available for some time to come.
“Buyers with deposits will always get preferential interest rates, but lenders are taking a more open-minded stance with low-risk applicants looking to maximise their buying power,” says Clarke.
READ: SARB closes 2021 with rate hike | Here's what it means for property owners
“We’re also seeing a trend towards more transparent discussion and collaboration between lenders and applicants willing to do what it takes to improve their risk profile and application strength. This attitude extends to distressed bondholders, who are receiving much more proactive support in overcoming challenges than they may have before the pandemic.”
'Freehold overtook Sectional Title sales'
The increasing desire for space saw freehold properties overtake sectional title sales by a wide margin in 2021. Freehold homes made up 51% of the Rawson Property Group’s sales. Apartments and townhouses accounted for only 25% and 8%, respectively.
As for concerns over property price growth, statistics show a return to a positive trajectory that is expected to gain momentum in 2022 despite the possibility of a COVID-19 fourth wave.
“Our sales statistics at Rawson show a 2% year-on-year increase in average property prices from 2020 to 2021,” says Clarke.
“Compared to 2019, there has been a 13% property price increase – that’s not a bad performance for the midst of a pandemic. It just goes to show that, no matter what is happening in the world, people still need a roof over their heads. That means they’ll keep buying, selling and renting property. It’s our job to help them do that effectively without putting their health at risk.”
Average time on market also dropped by 42% between January and September 2021, going from 50 days to 29. Not all homeowners are putting their homes on the market in order to upgrade, however.
'Definite increase in renovations'
“We’ve seen a definite increase in renovations this year. Spending more time at home has brought all those little flaws into sharp focus. Lower spending on travel, entertainment and eating out has also given some homeowners more disposable income. It’s great to see that being used to increase the liveability and long-term value of homes.”
Important trends for forward-thinking renovators to remember include the influence of millennials on the property market.
“Millennials are definitely our next big wave of buyers,” says Clarke. “Understanding where and how this age bracket likes to live is vital for sellers and agents hoping to tap into this growing market.”
'Influence of millennials on the property market'
Born in the age of technology, Grahame Diedericks, Manager Principal for Lew Geffen Sotheby’s International Realty in Midrand, says millennials are often regarded as the smartest and most educated generation and they expect everyone to listen to and value their opinions.
They will do extensive online research and expect clean, simple and quick transactions. They generally don’t respond well to old-fashioned sales techniques and prefer concise texting for day-to-day communication.
READ: Homeownership in your 20's, 30's and 40's | How to save money in each stage
When looking for a home, both groups prioritise factors like good internet connectivity and living within an easy commutable distance from work or college but there are a number of other criteria that differ considerably, says Diedericks.
'Collective property ownership'
Despite favourable market conditions, financial pressure on consumers remains high and affordability could become more challenging in 2022. As a result, Clarke expects to see an increase in collective property ownership as a means to maximise investment opportunity.
“Banking products designed for collective property purchases are largely targeting low- to middle-income consumers at present,” he says. “They’re very useful vehicles for broadening access to property as an investment, but need to be handled carefully to minimise risk for participants.”
Collective ownership isn’t just for those of modest means, however.
READ: Turning squad goals into property goals | FNB launches new collective buying product
“There is growing interest in fractional ownership from high-end investors, as well,” says Clarke. “I’m very curious to see what innovations evolve to support this burgeoning trend.”
'Prop tech and improved service'
Goosen says with more millennials becoming homebuyers the trend of touring properties virtually will grow. “Investments in high-quality photography, virtual tours and short films of the neighbourhood to provide buyers with a true sense of where they will be living, will be a growing trend. We will continue to see more investors embracing 3D virtual tours. I think 3D is just scratching the surface of what is possible and in the coming years, I am expecting most properties to have a 3D tour for clients,” says Goosen.
He says the trend of digital services will continue to grow and create efficiencies to allow property professionals to focus solely on the interpersonal aspect of the business.
“In 2022 CRM systems will be a growing trend. It contains contact information, purchase history, enquires, sales opportunities, and even marketing campaigns can be managed with the technology. A CRM system can increase real estate sales with end-to-end sales execution introducing new efficiencies into the real estate industry,” says Goosen.
Innovation has certainly not been in short supply for the property industry, with COVID necessitating an accelerated adoption of technology across the board. Clarke believes this digital revolution will continue throughout 2022, creating ongoing improvements in customer experience for property buyers, sellers and investors.
Safety also remains a vital consideration with Covid-19 still prevalent, and Clarke says sellers are more than justified in restricting in-person viewings to qualified buyers only. He recommends reviewing the latest Covid-19 protocol published by the Real Estate Business Owners of South Africa (REBOSA), and ensuring agents follow these best practices to the letter.
“There has seldom been a more exciting time to be involved in property,” he says. “We’re just scratching the surface of what technology can do for the property experience. We’re very excited to keep pushing the boundaries at Rawson, empowering our clients to make even better property choices as we head into 2022.
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