- Contrary to expectations, housing prices did not "crash" during 2020, according to a new index report by Lightstone.
- The index report shows that the mid-value segment ended 2020 at an annual house price inflation of 4.9%.
- In the low-value segment, house price inflation has, however, decreased from 10.2% to 2.5%.
National house price inflation was 3.05% as at the end of December 2020 compared to a year earlier, according to the latest Lightstone Residential Property Index released on Monday.
House price inflation means the percentage at which house prices increased over the year in nominal terms; therefore, not taking general inflation into account.
On a provincial level, house price inflation was 3.1% in Limpopo; 5.7% in Mpumalanga; 4% in KwaZulu-Natal; 3.9% in the North West; 1.9% in Gauteng; 3.1% in the Northern Cape; 2.4% in the Western Cape; 2.3% in the Free State; and 5% in the Eastern Cape. The index report shows that the low (under R250 000), high (R700 000 to R1.5 million) and luxury (more than R1.5 million) property value bands ended the year at an annual house price inflation rate of about 2.5%.
The mid-value segment (R250 000 to R700 000) ended the year at an annual house price inflation of 4.9%.
"Contrary to expectations, housing prices did not crash during the year. On the contrary, the luxury segment, that has been trending closer to -0.5% at the end of 2019, is now growing close to 2.5% per annum," states the index report.
"The mid-value segment has also added some speed going from 3.6% to 4.9% while the high-value segment has remained fairly stable at about 2.5%."
The report points out, however, that the annual house price inflation rate in the low-value segment has decreased from 10.2% to 2.5%.
"At this point it is difficult to point to the exact reason for the increase in the luxury segment and the decrease of the low-value segment. A possible reason could be because the luxury segment is far more dependent on the interest rate, which has decreased significantly, while the low-value segment is more dependent on economic growth which has decreased significantly," states the report.
Estate agents falling short
A survey by Lightstone found that nearly just 51% of estate agents surveyed met their sales targets in 2020, down from 69% in 2019. Of the respondents, 81% believe they would meet their sales targets this year.
The respondents also said that 14% of buyers bought properties without physically being there, double that recorded in pre-Covid-19 years. So, despite social distancing and lockdown restrictions, agents could still maintain and grow their client base and improve relationships. Fewer sales and the digitisation of operations led to 25% of agencies who responded having to retrench employees.
About 7% of respondents said properties were selling well because of the "buyers' market bargains" now available. This buyers' market is expected to continue into 2021 and 59% of respondents believe sellers will have to accept reduced prices if they are to succeed in moving their properties.