South Africans are buying property like it’s a Black Friday sale
Share this article:
DURBAN - We never thought we would be seeing a sustained market rally this long after the April-May Covid-19 lockdown, but, it seems that South Africans are buying property as if it is a Black Friday sale, according to Samuel Seeff is the chairman of the Seeff Property Group.
We have now seen the momentum continue for the fourth successive month. Many areas are achieving the highest sales turnover in years.
Is the momentum sustainable? Seeff believes it is and will carry well into 2021.
Key to this, is the unbelievably favourable interest rate, the best in about fifty years, said Seeff.
Property is significantly more affordable with lower qualifying thresholds on the one hand, and for upwardly mobile buyers, the ability to take bigger home loans and buy a bigger home or move to a better neighbourhood.
The property market remains driven by the low to mid-price segments to about R1.5 million and up to R3 million in some areas, mostly buyers who need home loans.
These are predominantly buyers with fixed incomes who are not particularly affected by the Covid-19 pay cuts which we have seen in industries such as tourism and more informal sectors.
Buyers continue flocking to the market to take full advantage of the low interest rate and favourable bank lending climate. Approval rates are still at over 80 percent and some two thirds of buyers are still securing full or close to full bonds, says Seeff.
In many areas, property is more affordable than renting. A R1.5 million property would for example only cost you around R12 000 per month on a bond compared to a rent of about R14 000.
According to Seeff, above R3 million though buying remains more selective and sellers will need to continue ensuring that their property offers the best value as buyers are negotiating strongly.
Seeff said that further that inflation continues dipping, being down to 3 percent for September and now at the bottom of the Reserve Bank’s target range making it a strong case for a possible further interest rate cut of 25bps this month.
At the very least, the low interest rate should remain until late into 2021 and therefore it is expected that the momentum in the market is to be sustained into late 2021.
“We have a well-balanced market. Usually, we would expect that this level of activity would result in stock shortages, but the market is still adequately stocked. That means that prices are not running away, and buyers are still able to take advantage of the favourable interest rate and bank lending conditions,” concluded Seeff.
BUSINESS REPORT ONLINE