SA’s housing market rebounds as bond applications increase

After being hardest-hit by months of lockdown, South Africa’s housing market, which suffered a 60% decline in sales volumes, has gone on a rebound, according to First National Bank’s (FNB) latest residential property barometer.

Commenting on the residential market, which saw price growth reach 0%, FNB senior economist Siphamandla Mkhwanazi said yesterday the overall global picture showed a similar trend to that of South Africa, following the Covid-19 outbreak.

“As restrictions eased, property markets in the United Kingdom and the United States, swiftly recovered,” said Mkhwanazi.

SA’s annual house price growth rebounded to 1.4% in July – down from an upwardly revised 0.7% in June and 0.6% in May, with bond application volumes being 10% higher compared to the pre-lockdown period. Mkhwanazi said the bounce back in prices reflected “the unexpectedly rapid recovery in market activity since the easing of lockdown restrictions”.

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“Other factors include pent up demand from the lockdown period, when buying decisions were taken before the lockdown. Some of these are delayed purchases, on the back of significantly lower transfer duties announced in the February 2020 budget, which came into effect in April this year.

“Another factor is that the record low mortgage rates are incentivising renters to buy and first-time buyers to front-load their purchasing decisions as monthly mortgage payments have come down significantly. This means that sales that would otherwise take place sometime in future, are happening now, with some buyers looking to fix mortgage rates, while they are at record lows, fearing that they might increase in the near future,” he said.

There was “anecdotal evidence showing rising demand for bigger properties – mainly free-standing homes – in less crowded second tier cities”.

“The growth of working from home is creating demand for bigger homes, which can offer additional features such as home gyms and conducive environments for home-schooling,” said Mkhwanazi.

Dr Andrew Golding, chief executive of the Pam Golding Property group, agreed: “One can imagine that it has sparked major shifts in terms of various trends such as relocating to smaller towns, downsizing or upsizing – to satisfy the need for work from home and more outdoor space.

“We are currently seeing in the residential property market that the main price bands experiencing the most interest and activity are those up to R2.5 million to R3 million – as well as the middle market price band between R3 million and R8 million; and upwards.”

– brians@citizen.co.za

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