- The average purchase price increased by 13.8% for the first quarter of 2021 compared to the first quarter of 2020, says home loan comparison service ooba.
- In the space of a year, buyers have substantially changed their criteria for an ideal home.
- Buyers are finding bigger properties that are better value for money in suburbs outside of city centres.
There are signs of "robust growth" in the residential property sector despite the dampening economic impact of the Covid-19 pandemic, according to data from home loan comparison service ooba for the first quarter of this year.
According to the "oobarometer", the average purchase price increased by 13.8% for the first quarter of 2021 compared to the first quarter of 2020. The average purchase price of first-time buyers showed a 15.1% increase for the same period and a 3.5% increase for the first quarter of 2021 compared to the fourth quarter of 2020.
The barometer report points out that, in the first quarter of 2020, South Africa had just entered its first hard lockdown. At the time, property prices were experiencing a negative growth slump and the future was uncertain, with estate agencies across the country unable to operate. "The paradox of double-digit property price growth recorded for residential property amidst a global pandemic coupled with the worst global and local economic downturn since the global financial crisis of 2008 is astonishing," Rhys Dyer, CEO of ooba, said in a statement on Thursday.
He explained that, in the space of a year, buyers have substantially changed their criteria for an ideal home. Due to adjusting to lockdowns, many people have become used to working from home on a semi-permanent or permanent basis. Consequently, buyers are prioritising quality of life and new ways of working when purchasing a home.
Properties that feature separate workspaces, reliable internet connectivity and more space for families spending more time at home are in demand. Buyers are finding bigger properties that are better value for money in suburbs outside of city centres.
"Areas that were once viewed as potential holiday home destinations are now more sought after as permanent residences as opportunities to work and study remotely while enjoying a better lifestyle have increased. Homes in sought-after areas that are competitively priced are selling relatively quickly, even at the top end," explains Dyer.
"The unprecedented low cost of borrowing coupled with the major banks' appetite to take on low or no deposit loans have created an ideal buying environment, particularly for first-time buyers."
During the first quarter of 2021, ooba successfully obtained home loan finance for 80.7% of its applicants, 61% of whom required a zero-deposit loan. Its first quarter of 2021 approval rate among first-time buyers who required a zero-deposit loan, was 79.3%. "Property ownership is now more accessible to aspirant first-time buyers who previously could only afford to rent. Potentially renters may be able to buy a home at a lower monthly cost than their current rental payment," says Dyer.
Supply and demand
Marcél du Toit, CEO of residential property platform Leadhome, agrees there is currently a "thriving market".
"The property market is always affected by supply versus demand, and right now we have lots of clients able to invest into property as a result of the low interest rate. What this means is that properties are currently selling for less than their anticipated price as sellers scramble to secure sales. It really is a buyers' market right now," says Du Toit.
Leadhome statistics show that, when the "hard" lockdown ended on 1 June 2020, buyer interest increased sharply.
Du Toit, too, says the big increase in buyer interest was spurred by a shift in homeowners' priorities due to the impact of lockdowns and increased working from home.
"Almost overnight, people needed more space to work and school their children from home; bigger family areas, kitchens and gardens became sought after; and people no longer had to plan their days around commuting," he says.
"Many South Africans 'semigrated' from city centres to outlying areas to find homes that could accommodate these needs. Not only do the suburbs, and even rural towns, have this kind of space, they also offer more bang for your buck."
At the same time, many South Africans downscaled due to financial constraints caused by lockdown.
"It's safe to say that the property market is buoyant, even in an economic environment that continues to be volatile," says Du Toit.