Strong appetite for investment property

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AS LENDING conditions in South Africa’s housing market remain favourable - with competitive average concessions relative to prime, and rising mortgage approval rates - applications for investment or buy-to-let properties have rebounded strongly since late-2021, rising to 8.1% of total applications according to bond originator, ooba.

Coupled with this, and according to ooba statistics, the approval rate for 100% bonds remains buoyant at 84.7 in October, remaining above 84% for the third consecutive month, at a level which was last briefly recorded in late-2021.

These positive indicators reflect consumers’ sustained appetite for home ownership and investment in residential property, which is very encouraging particularly when seen against the backdrop of ongoing global and local economic challenges.

In addition, the percentage of sellers upgrading remained surprisingly high, given the current economic scenario, at an estimated 13% of all Q3 sales.” (Source: FNB Estate Agent Survey).

Another interesting trend which is contributing to steady activity in the residential property marketplace is the movement of people within South Africa – including ongoing semigration - which surged in Q3, rising to a record high of 14% of reasons for selling according to FNB.

In recent years we’ve seen home buyers from other provinces, most notably Gauteng, semigrate to uMhlanga and other areas of the burgeoning KwaZulu-Natal North Coast, as well as the affordably priced KZN South Coast. The KZN lifestyle is highly sought after with an idyllic year-round climate and excellent schools.

Demand for North Coast properties is driven by the area’s convenient location, infrastructure and long-term investment potential, and is being fuelled by both local buyers and upcountry investors as well as some foreign interest.

With easy access to King Shaka International Airport and key arterial routes in and out of the Durban area and surrounds, uMhlanga and nearby Sibaya are ideally placed to attract out of town investors as well as buyers looking to relocate permanently to this highly appealing node. uMhlanga is short drive to the airport, making it appealing to Gautengers who have opted to enjoy a coastal lifestyle.

Although national house price inflation continues to ease, the pace of this is slowing, suggesting that a lower turning point may be approaching. Coastal (within 5km of the coastline) property prices continue to accelerate, rising by +8.6% in June 2022 (latest available data), while non-coastal eased to +4.2%, which means that the coastal price premium widened to +4.4% which is the highest since mid- 2005, according to Lightstone.

Also of interest is that the Covid-induced boom in freehold price inflation continues to fade, with the gap between freehold and sectional title, which peaked at 4.0% in mid-2021, narrowing to 1.5% in September 2022. (Source: Lightstone)

Greta Daniel is national sales & operations manager for Pam Golding Franchise Services. For further information contact Pam Golding Properties email headoffice@pamgolding. co.za or visit www.pamgolding.co.za

GRETA DANIEL