Blog | 21st January 2021

Property Forcast: 2021

 

From avid readers to avid listeners, we at Reeflords are proud to keep you informed. Inspired by the 8th episode in our PodAcademy Podcast series, we’ve summarised the latest property market trends from 2020 and how those will inform the market for 2021. If you would like to listen to the original podcast, click here.

What’s next for the New Normal?

From personal and professional to lifestyle — and how and where we live it — given the year we’ve just had, it would be safe to say that the most we have in common is wondering what’s in store for 2021.

While there is a silver lining where property-buying is concerned, there is a lot to consider when buying property, and much that will impact the decision you make because of how that affects both your short-term and long-term commitments. As we at Reeflords pride ourselves on providing relevant information that keeps our customers up to date, we are dedicating this — the first blog post for 2021 — to forecast some of the property trends and insights, and what those could mean for you whether you are a first-time home buyer, an investor, a seller or even a tenant.

The National Treasury, TPN, BetterBond Experts and Reeflords’ own in-house data has been used to ensure that we collate and provide the most credible, relevant and time-sensitive information for you.

Did you know?

The property market was one of the strongest contributors to the South African GDP in 2020 — even in the wake of the Covid-19 pandemic?

First-time home-buyer bond applications made up 70% of the total applications in 2020.

Interesting data to note includes:

  • There are more women investors entering the market than ever before
  • The average age of these investors has dropped from 37 to 34
  • The R600 000 to R2-million price band is the most thriving market


The silver lining

What made 2020 a good year for property investors?

  • The interest rate drop to 7% in 2020 meant that properties ultimately became 30% more affordable than they were at the start of the year
  • The upfront deposit (where required) decreased by 18%

It makes sense then that the growth for 2020 contributed R191-billion to the GDP, generating approximately R46-billion for the country’s direct national revenue.

Looking ahead

While interest rates make this a great time to buy, it is important to assess all the financial factors. Take the inflation rate for example: this being around 2% translates as a sluggish market in terms of growth because of how rising costs affect building materials, labour and logistics costs.

Point of interest: While this may sound like a damper, it’s also a heads-up: if you’re looking to buy into a brand-new development — don’t wait! The best time is now.

Second hand properties

The four main reasons that we’ll see a boost in availability of second-hand properties are:

  1. People are downscaling
  2. Landlords want to avoid having to bankroll the arrears related to non-paying tenants
  3. Owners are looking to convert their investment to cash in order to alleviate financial pressure(s)
  4. There’s a greater demand for properties as more and more people are working from home

What does this mean for you as a potential buyer? There’s a bargain out there for you, for sure!

Point of interest: While you’ll see availability of second-hand properties across the spectrum, the trend shows that those outside metropolitan hubs will be snapped up first. As more people are settling into remote working, the choice to move away from crowded hotspots is becoming more desirable.

The rental market

This area saw dramatic stagnation in 2020 due to job losses and salary cuts related to the government-mandated lockdown. Many landlords faced the issue of non-paying / late-paying tenants, but — most notably — a dramatic reduction in overall demand. The repercussions of the lockdown on unemployment and salary reductions presented a reality where house shares became a necessary option as well as those who could, moving back in with family members (such as parents).

Point of interest: The spin-off of this reality saw a surge in first-time home buyers as many people who were adamant renters before, looked into the opportunities of becoming homeowners and weighed up the comparisons between renting and paying toward their own bond.

In summary

As we always say, there is a lot to consider when buying property, and each person’s relationship between opportunity and reality is unique to them. Whether you are looking to buy property to live in or rent out, there are always going to be pros and cons that you should weigh-up carefully. Deciding where the most value lies comes down to doing your research, your budget, a long-term feasibility exercise, and looking at what you can expect from local trends.

Remember:

  • Interest rates remain low
  • Demand for the under R2-million bracket will continue to grow, but
  • Banks will be more cautious with regards to their lending

If you’re looking to buy property and rent it out, consider what your competition will be like in terms of availability of properties within the same bracket and what the job market means for people’s likelihood for affordability.

TIP: If you’re looking to become a landlord, be sure to check out our December blog article on tips for screening your tenants.

If you’re looking to buy property to live in, consider whether your own income stream is stable and how the bank will see this when reviewing your bond application, but also that — should you be successful — you’ll be paying a smaller deposit (if any) and low interest on your bond, meaning your investment starts growing sooner than you expected.

TIP: Don’t be overwhelmed by the thought of becoming a homeowner, and check out our June, 2020 blog on the 5 Steps for Bond Buyers.

Whether it’s helped you make a decision, or helped you know what questions to ask before you do, we hope this post has given you some valuable food for thought about all-things property — and what lies ahead for 2021.

We welcome your questions, feedback and/or suggested topics for future blog articles and podcast episodes, and ask you to email these to catherine@reeflords.co.za or post them to our Facebook page.

Safe and prosperous wishes for 2021 from all of us!

Think home. Think Reeflords.


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