Dr. Andrew Golding, Chief Executive Officer of Pam Golding Property Group, said the residential real estate market in South Africa, despite the uncertainties surrounding Covid-19 and the subsequent blockade, despite the difficult trading environment. It proved to be one of the more resilient sectors.
The unexpected strength of the housing market last year was catalyzed by first-time buyers in response to aggressive interest rate cuts, but in 2021, the national housing market seemed to be felt by first-time buyers. Driven by a second wave of demand stimulated by repeaters. The effects of the economic downturn and the benefits of rate cuts have begun to diminish, he said.
“These repeaters have moved not only because of interest rate cuts, but also because of the option of working from home and the desire for a more relaxed lifestyle in larger homes and more affordable homes in the surrounding suburbs. Also motivated by the ability to do. Metropolitan areas and small towns were traditionally considered destinations for retirement and vacation. The result was a so-called zoom boom. “
According to Golding, the convergence of this factor has led to an unexpected surge in housing market transactions, despite the severe economic turmoil caused by the pandemic.
“This desire for relocation was partly in response to the blockade, which made teleworking (WFH) and homeschooling, especially outdoor spaces, more attractive and required a larger home. ..
“WFH’s capabilities have made it possible to consider suburbs and towns that were previously far from schools and workplaces, but homeowners usually buy larger, more affordable, free-owned homes. We were able to do. Long-term structural changes to sectoral title housing in the national housing market. “
Going forward, Dr. Golding outlined trends and factors that could impact the housing market by 2022.
Degree of interest
These are likely to rise, but the slow pace suggests that this will continue to be a benign environment for the housing market, with interest rates expected to rise gradually in small increments of 25bps. However, a downturn can be a headwind.
“But the emergence of new variants and the arrival of the fourth wave of Covid infections could delay the timing of possible further interest rate hikes,” he said.
Affordable
“The sharp rise in first-time buying demand has already diminished as the effects of aggressive interest rate cuts early last year have weakened.
“Although interest rates are unlikely to be a major obstacle, consumers are addressing the pandemic’s economic downturn, lightening the burden and curbing growth prospects,” said Dr. Golding.
He said South Africa’s young population means there is always stable demand from young buyers as long as they can afford to buy a home.
Coexistence and fusion of housing and commerce
According to Pam Golding, the symbiotic trend continues to gain momentum, despite initial concerns that a pandemic might end it.
“People recognize that infections are more related to shared spaces than to contaminated surfaces, and as we all spend more time at home, outdoor spaces can maintain their appeal. It’s sexual. It’s less time than last year, but longer than it was before Covid, “Golding said.
He said an important theme of the pandemic is that the business needs to be as flexible as possible. That’s why coworking in microunits with shared living spaces that provide a community and reduce costs and maintenance is just as popular as coworking.
“The concept goes a step further, and like BlackBrick, monthly rents include BlackBrick-developed accommodation in both Cape Town CBD and Sandton.
“The development of these and neighboring areas is focused on creating a community that provides accommodation that is as flexible as possible.”
Conversion of office space
“We’ve seen office spaces transform into residential and multipurpose models for some time, but the focus is on trying to enter as many markets as possible as companies become more flexible to survive in a pandemic economy. That is, offices, retail stores, homes, gyms, etc., “Golding said.
Examples include two businesses that use the same venue at different times of the day, or office spaces that offer a food hall instead of a reception area to enhance the attractiveness of the workspace.
“Pure office space is likely to be the most pressured of all sectors, so it is likely that many of these, including residential components, will need to be modified.
“For example, one Thilbault in the heart of Cape Town has been redeveloped into 50:50 offices and homes. In Johannesburg, especially in the Bryanston area, we are interested in converting office parks into section-titled apartments. Is increasing. “
Business hub
Offices need to be in prime locations and accessible, even if people come to the office only occasionally, especially given the accelerating rise in fuel prices, which is even more important than before. It is becoming clear that it has become.
“This focuses on the Central Cultural District, acknowledging the fact that people may need physical connections to collaborate, rather than being there purely for business. Means. “
He said that for many young people, living in CBD is not only an element of access to work, but also a “topic” element.
Given South Africa’s young population, Golding said many are likely to prefer living in a city hub over the quiet life of the country.
“Conveniently located in the heart of the business, apartments have bars, clubs, coffee shops, restaurants, other entertainment, numerous work opportunities, or at least coworking spaces, many away from the hustle and bustle of the city. Continues to provide attractive lifestyles to young buyers. Proximity between start-ups and SMME. “
The zoom boom is declining, but immigrants are rampant
One of the key trends that emerged during the pandemic was the rise of the zoom boom. Working remotely meant being able to live anywhere, Pamgolding said.
This has led many homeowners to relocate to the surrounding suburbs and smaller towns that were historically considered vacation and retirement destinations.
“But now we realize that there are certain types of work that require physical interaction with our colleagues, and people are gradually returning to the office,” Golding said.
“Currently, there is a general consensus that it is unlikely to return to the five days of the office week that was prevalent before the pandemic, but instead we are adopting some kind of hybrid model. Three days a week ( By using the office (at least), people have come to reassess the reality of living hours away from work by car. “
However, he said, long-term migration to the Western Cape is likely to continue, as Western Cape is still the only state that can be delivered.
For example, the ability of Cape Town to keep businesses and residents in Stage 1 while Eskom has everyone in Stage 2 enhances its appeal.
“For those who can’t afford to buy a home in Cape Town’s metro housing market, the second tier and coastal towns of the Western Cape are permanently attractive as desirable lifestyle destinations, not because of the zoom boom. It remains.
“These include, among other things, the whale coastal areas of Cape such as Hermanus and Onras, the towns of Borland such as Somerset West, Stellenbosch, Franschhoek, Pearl and Wellington, and George on the Garden Route.”
Are people looking for a rent or a purchase?
According to Pam Golding, the transition from rent to purchase probably peaked in 2020 as FTHB took advantage of rate cuts.
“The rental market is improving now that the effects of these cuts have diminished and the reality of the economic downturn is felt, and we need to be as flexible as possible in these highly uncertain times. That will definitely make the rental more attractive. “
But South Africa still has a strong tradition of homeownership, including first-time buyers and those seeking the value of money, Dr. Golding said.
“On the west coast of Cape, there is a serious inventory shortage of up to 2.5 million rands of free-owned properties, and reasonably priced homes will be sold within 7 days, while some in the northern suburbs of Cape Town. Demand is outpacing supply in the region, and high-priced properties are selling rapidly, “he said.
Real estate continues to be sought after
Real estate homes are still in high demand and buyers will have to pay extra for the safe real estate they are looking for. For example, Pam Golding Property recently sold out luxury homes in northern Constantia.
Multi-generational life
The need for flexibility in difficult economic conditions suggests that multi-generational life will continue to grow in popularity, Pamgolding said.
Off-the-grid
Affordable for homeowners, partly because the cost of electricity and utilities is rising rapidly and service is inadequate, with the installation of energy and water-saving solutions becoming the new standard. There is a continuous desire to get off the grid, even if it is targeted. And, as climate change is becoming an important mainstream issue, Dr. Golding said.
“We remain optimistic about the country’s residential real estate market, which is expected to remain active, due to the strong long-term appeal of the sector,” said Dr. Golding.
“This is especially true because, in addition to the usual reasons for moving in the market, the blockade has the rationale for a wave of new reasons for relocation and asset acquisition, from the aforementioned expansion of additional space from work at home. Was created incorrectly. Lifestyle scenarios move farther and more attractive destinations.
“If you can live and work anywhere, it makes sense to live a better life in a more desirable place.”
Increasing demand for accommodation to buy has facilitated activity in the residential real estate market, as he is primarily a large population of “young” buyers, many of whom are likely to prefer living in urban hubs. As some existing homeowners become more upscale, they boost activity in markets, mid-markets and higher price points, causing inventory shortages in high-demand areas.
Source: eminetra.co.za
