If you think Covid-19 and the concomitant lockdowns and job losses have resulted in a slump in the property market, you are wrong. To the contrary: An extraordinary and unexpected boost in buying activity saw June through December 2020 turn into the best sales months in the Rawson Property Group’s history … and the trend is continuing!
The boost in buying activity is mainly due to the 2,25 percent interest rate cut announced by the Reserve Bank in July last year, which reduced prime and the base home loan rate to a historic low of 7 percent.
“The interest rate cut created nearly irresistible conditions for potential buyers,” says Tony Clarke, MD of the Rawson Property Group. “We had a flood of buyers hitting the market across all regions and in all price bands.”
According to Clarke, 2021 is already well on its way to extending the streak, and the Group expects it to continue as long as the interest rates remain favourable.
He says the upturn in buying activity was particularly evident in the price bracket below R1-million, which achieved of 43,92 percent of sales, followed by the bracket between R1-million and R2-million, which achieved 35,99 percent of sales.
“A good percentage of our buyers are first timers on the market,” he says, “but upgrades, holiday homes and investment purchases also feature strongly. Conventional freehold homes are, however, still the most popular, with sectional title second.”
While low interest rates undoubtedly make buying property more affordable, Clarke says they also offer an opportunity for consumers to consolidate finances, pay off debt and boost savings.
“Using this time wisely, will go a long way towards minimising the effect any future interest rate increases will have on the security of existing property investments. It will also help new purchasers cover their fees and deposits despite tight financial times,” he says. “We don’t expect interest rates to start climbing until the second quarter of 2021. Even then they are likely to climb slowly. These optimal conditions will, however, end at some point, so property owners should make the most of them while they can.”
The favourable conditions saw first-time buyers jumping at the chance to get a foot on the property ladder, with Rawson franchises recording their highest numbers of sales in the entry-level price brackets.
“A lot of tenants in the R7 000 to R11 000 per month rental range, are taking this chance to buy their own homes instead of paying off their landlord’s property,” says Clarke. “Bond repayments and rentals are the closest they’ve been in years.”
First-timers aren’t the only ones taking advantage of current conditions. Clarke says the weak rand is also starting to entice foreign investors in the mid- to high-end market segments.
“We still expect growth on the luxury end of the market to remain modest compared to other price bands,” he says, “but an uptick in activity is an important step towards rekindling positive momentum.”
Regardless of market segment, Clarke says today’s buyers have become more proactive than ever, performing intensive research before committing to any purchase. It has also become common for buyers to get prequalified for finance in order to strengthen their position during negotiations and maximise their chance of closing the deal on their dream property.
As for lenders, Clarke says sentiment remains bullish, with up to 105 percent bonds on offer to qualified buyers. He cautions against pushing the boundaries of affordability, however, recommending a more conservative approach in light of current circumstances.
“Our economy is still under extreme pressure and job security is low. It may be smarter for buyers to use this time to buy low and pay off their debt faster than to push their limits and risk losing it all if their situation changes.” “This is not the same world, or the same property market, that we were dealing with this time last year,” he says, “but there has seldom been a better time to invest in property. It’s exciting to see South Africans recognising this opportunity and putting themselves out there on the market. It’s a positive step for property and an important step for our country as we work to recover from the toll Covid-19 has taken on our spirits and our economy.”
For more information, go to: https://rawson.co.za/contact
The Rawson Property Group leaned heavily on its award-winning technology to maintain service-delivery standards, despite lockdown restrictions. This included the use of virtual valuations, 3D virtual tours, virtual showhouses, online meetings and electronically-signed documentation – all designed to keep property transactions moving while protecting everyone’s health and safety.
