Against the backdrop of a local economy that remains under pressure with unemployment, higher levels of inflation, rising interest rates and load-shedding, the South African residential property market remains resilient. While overall property sales volumes are lower compared to pre-Covid volumes, the annual property inflation was positive at 3.82% in September, albeit a slight decrease compared to August. Through it all the housing market soldiers on, and property remains a solid investment, especially for home buyers.
Property trends point to a buyer’s market – more in some regions than others – driven by semigration and subdued house price inflation. As financial experts who do good, Nedbank takes a closer look at current residential property market trends to help home buyers make good money choices.
Since Covid, many South Africans have adapted to the flexible work-from-home lifestyle and migrated to more remote and scenic locations. Certain provinces have benefitted from the semigration trend, in particular the Western Cape, which has significantly grown its share of residential sales activity since Covid, while Gauteng has been adversely affected the most. According to Lightstone, smaller towns across the country have benefitted more than the large metros. In the Eastern Cape, Jeffreys Bay, St Francis, Port Alfred, Kenton-on-Sea, and Mthatha are showing higher sales activity post Covid. In KwaZulu-Natal, residential property hotspots are Ballito, Howick, and smaller towns in the Midlands.
Subdued house price inflation
Higher cost of living, rising interest rates and the resulting decline in transaction volumes are significantly contributing to a subdued property-price growth trend in South Africa. More and more cash-strapped South Africans are holding off on buying homes while waiting for interest rates to decline. The widening gap between income levels and current house prices is forcing a large proportion of sellers to recalibrate their expectations and reduce their asking prices. The subdued house price inflation trend is positive for home buyers as it provides affordable opportunities to acquire property.
“In the current buyer’s market, Nedbank is helping home buyers secure their dream homes and providing a smart plan to finance their future home needs,” says Stephan Potgieter, Executive of Asset Ownership at Nedbank. As part of your home buying journey, it is important to cater upfront for future costs of maintaining and improving your home, such as reroofing and repainting the house exterior, adding a playroom for energetic toddlers, remodelling your bathroom, or even building an extra garage for your growing car collection.
When you purchase a house, Nedbank offers HomeVision as part of your home loan application. “HomeVision allows you to register a bond that is higher than the property loan amount in order to access the extra money in reserve to finance future home needs,” adds Potgieter. You will be able to register the bond for up to 30% more than the property price, up to a maximum of R7.5 million. Initially, you will use only the money you need to complete your purchase and your repayments will show only the amount you have used. The remaining loan amount will be registered at the deeds office and can be used later without additional attorney fees or applying for a second bond. “Nedbank will simply do an affordability check and property valuation to loan you some of or all the extra money already registered with HomeVision at the start of your home loan," explains Potgieter.
Buying your dream home is a big deal – whether you are semigrating from Gauteng to the Western Cape or taking advantage of the subdued house price inflation trend, Nedbank will help you save money and time for those future home needs.