Industry experts agree that opportunities for investment in property below R2m will remain promising this year, while headwinds are expected for the midmarket sector
WORDS: DEBBIE HATHWAY – PHOTOS: SUPPLIED
The demand for homes priced below R2m is expected to remain lively in 2021 as long as interest rates remain at current levels. Gerhard Kotzé, MD, RealNet estate agency group, believes demand will be upheld by first-time buyers and repeat buyers downscaling. “However, we may see the actual number of transactions in this bracket start to slow down as the banks begin to lend more cautiously in the face of growing concerns about employment stability,” he says.
Meanwhile, he expects the second tier of the market (between R2m and R4m) to encounter headwinds and advises owners who need to sell their homes to list them as soon as possible. Berry Everitt, CEO, Chas Everitt International property group, expects the residential property market to start losing some of its 2020 momentum soon, even though inflation is likely to remain depressed and the Reserve Bank is likely to keep interest rates low until at least 2022. “Even though we expect demand to remain strong, especially at the lower end of the market, we also foresee that bond approval rates will decline overall, and that demand will translate into fewer actual sales this year,” he says.
Still, Everitt notes that the number of South African homeowners planning to emigrate is diminishing, which bodes well for the smaller towns and coastal areas. Isolation induced by the pandemic and the consequent need to work remotely have freed people up to move wherever they want to. Thus, these locations are seeing a surge in executive semigration and a comparable decline in housing inventory.
Buyers flock to ‘zoom’ towns
In the Cape, villages attracting attention from prospective homeowners are Rooi Els, Pringle Bay, Bettys Bay, Kleinmond, Malmesbury, Hermanus, Onrus and Gansbaai. “Since the lockdown began, buyers have seen the value offered in ‘zoom’ towns, and are snapping up seafront properties,” says Nicola Lloyd, Pam Golding Properties area manager, Rooi Els, Pringle Bay, Bettys Bay and Kleinmond. “Generally, the major demand is for homes priced between R2m and R3m.”
Says Annien Borg, MD, Pam Golding Properties, Boland and Overberg regions, “In the small, scenic villages of Onrus, Vermont and Sandbaai, vacant land is priced between R600,000 and R3m, apartments start at R1m, while homes range from R2m for a two-bedroom house to R16m for a beachfront villa.” Hercules Weyers, Pam Golding Properties area principal, Swartland Junction and Mount Royal Golf & Country Estate in Malmesbury, says vacant plots of approximately 720m2 at the estate are selling between R550,000 and R1m, while completed three- to five- bedroom homes are selling between R2,5m and R4,5m.
Magic formula
Property remains a safe investment in uncertain times and offers many opportunities for tax relief. According to a recent report by wealth intelligence firm New World Wealth and luxury lifestyle development Steyn City, South Africa is home to more than twice as many millionaires (HNWIs) as any other African country. It ranks 30th in the world in this regard, ahead of Greece, Portugal and Turkey. South Africa is a global pioneer in estate living and boasts many of the world’s best lifestyle estates, such as Steyn City and Val de Vie. New World Wealth estimates that more than 45% of SA HNWIs live or have homes on estates.
An additional 30% of HNWIs have homes in luxury apartment blocks, which have been the fastest growing residential segment in South Africa over the past 20 years in terms of price growth. Most of them are based in Johannesburg (Sandton especially), Cape Town, Umhlanga and Pretoria. Meanwhile, residential developments retain popularity as they cater to a broad range of buyers in various price bands. Balwin’s Wedgewood Sandton lifestyle apartment development has achieved record sales, with R1bn sold since 21 November last year. That equates to an unprecedented rate of R22,2m in sales – daily – over 45 days.
A contributing factor to this success is the building design, which enables attractive purchasing opportunities until the final apartments are sold. “Balwin is renowned for our fast rate of sales, but this rate exceeds anything we have achieved within any of our projects to date,” says Steve Brookes, CEO, Balwin Properties, SA’s largest residential developer.
Stefan Botha, director, Rainmaker Marketing, is proud to be associated with the Wedgewood Sandton product and says they have proven that the market responds favourably when there’s an ideal combination of product, price, location, low interest rates and a low deposit. “We’re delighted that there’s such a healthy balance between investors and first-time buyers who will make Wedgewood their home.” Wedgewood Sandton features studio, one- and two-bedroom lifestyle apartments priced from R850,000. All bond and transfer costs are included in the purchase price.
