Factors Influencing the Property Market.

Factors Influencing the Property Market.

Category Property Markets

November seems to have really flashed by. Positive note is that the Reserve Bank held the rate at 3.5% which continues to stimulate the property market. It is also very good news for people with interest bearing debt as gives some relief to managing the debts.

First time homebuyers, as a percentage of homebuyers, continues to play a significant factor in property sales. Mortgage bonds granted show appetite to purchase which is a strong indicator of sentiment. There is always a however as the market is well-balanced up to R3 million but softens quickly from that point on. Please do not read that as no activity in this range.

The rental market shows strong performance, and the impaired rentals continue to show improvement as the months go past. Rental price growth is subdued but demand is exceptionally high in the R5000 to R10 000 price range.

While activity levels have certainly picked up, this is also a time to ensure that we remain vigilant when it comes to adhering to the Covid-19 safety protocols for the clients with whom we interact.  With a lot of conversation world-wide regarding spikes in infections it is imperative that we remain strict in our continued adherence to safety protocols.  

The safety protocols have undoubtably had a positive side effect on the market. People that need to sell, recognising the protocols to be adhered to, are serious sellers when listing in these conditions. Buyers who are prepared to be screened multiple times to view various properties are also serious. The bottom-line is that the buyers and sellers in the market right now are less speculative and more real about the necessity to do a transaction.

We are also led to believe that the entire South Africa is moving overseas. Whilst there are substantial amounts of people doing exactly this 50% of our last 10 sales have been to foreign investors.

In the latest ABSA Home Buying Sentiment index the following is of interest and I am sure resonates with both Sellers and Buyers out there.

Buying Property:

Sentiment for buying property remained unchanged from Q2 2020, with the main drivers of positive and negative factors as follows (percentage of respondents in brackets):

Positive factors - Property prices and interest rates are low (38% and 36% respectively).

Negative factors - Lacklustre economic performance (42%) and COVID-19 making the market less attractive for buying (36%).

The number of respondents who cited the low interest rates as a driver for the currently good timing to buy property has continued to grow, increasing by 11% in Q3 2020. The increase is the same as the one achieved in the previous quarter (+11%), despite interest rates only reducing 0.25% during the quarter (vs. -1.50% in Q2). Given the shift in supply and demand dynamics seen in Q2 2020 (increase in sentiment towards property acquisition and decrease in sentiment towards selling), the increase in respondents citing low property prices for Q3 2020 comes as a surprise. There has been a significant increase in the number of respondents who believe that property prices are low, with potential bargains in the market (+6% vs Q2).

Selling Property:

Sentiment for selling property has increased by 9%, with the main drivers of positive and negative factors as follows (percentage of respondents in brackets):

Positive Factors - Property is a good investment (37%) and the demand dynamics are making it possible to free up capital (16%).

Negative Factors - Prices are low (49%) and the economic outlook remains negative (25%).

The number of respondents considering it a good time to sell increased by 9%, from a multi-year low of 20% in Q2. The increase in the number of respondents who are more positive about selling property is supported by the anticipation that at the currently low interest rates, improved buyer affordability has increased demand, which will enable sellers to secure a good price for their property - whether it be for freeing up capital or to lock-in returns before the market turns.

I hope that you find the above useful and encourage you to contact us to discuss any points regarding the property market. We are more than willing to give advice to help you prosper through property. You can contact me on gary.grobbelaar@seeff.com.

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