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Letter from the editor MINE is one of those tragic property stories. Bought young, sold at the wrong time, didn’t reinvest the proceeds immediately, the market changed and I couldn’t get back in to buy again. Decided to rent for a short time in a new city. The rental property turned out to be my home for 17 years. It is almost a story written as a warning for youngsters who choose not to invest in property. Or for someone who decides to buy but sits too long on the fence trying to find the perfect home in the perfect area with the wrong budget; trying to tick all the boxes. Some things that have held me back: waiting for the market to turn; wanting to live in a particular area which is way out of my budget; being spoilt by the location and size of my rented apartment; finding it difficult to get a home loan as I was working for myself for 15 years; unable to gather money for a deposit... and so the story goes on. I think if I could go back to my younger self perhaps I’d say to her: don’t sell your apartment – use it to build wealth. Or if I met her after she had sold it I would have said: get straight back into the market now – don’t even wait a moment. Would have, could have, should have. So while I am still looking for that “forever home”, I am also finally okay with the idea that I may very well end up being a “forever renter”. It would have been comforting to have known that by my older years I would have a piece of property that was my own and the freedom that would give me; that I’d have a roof over my head and not be at the mercy of a landlord. But renting also has its pros and there is a sort of a freedom in it too. Experts say there is no time like the present to buy. So yes, if you’re looking and have a budget, go for it. Property has mostly proven to be a good investment as our main story this week – which tracks property values over the past decade – shows. By the same token, perhaps if I bumped into my younger self I’d tell her not to spend so long bemoaning what she feels was a bad decision. Because whether you buy, rent, live in a camper van, share a home, get a mortgage with a friend, move back with your folks, move in with your kids – it’s all okay. Of course, had this Property360 magazine been in existence in my youth with all its valuable and helpful weekly advice and tips, maybe things would have (could have, should have) been different ... Happy reading everyone Have a great weekend Warm regards
Vivian Warby vivian.warby@inl.co.za
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The past decade has seen the property market go through a number of peaks and troughs. PICTURE: PAT WHELAN/UNSPLASH
Still good growth in bricks and mortar Despite economic ups and downs over the past decade, investing in the property market has seen fairly steady returns BY BONNY FOURIE bronwyn.fourie@inl.co.za
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EN YEARS ago, the average residential property in South Africa sold for R790 000. Today, that same average property is selling for R1.267 million, almost R500 000 more – despite a global pandemic that saw South Africa’s economy restricted under lockdown. “The first thing that the figures make obvious is that the South African property market has not crashed,” says Schalk van der Merwe, franchisee for the Rawson Properties Helderberg Group. “In fact, given the utter turmoil occurring around the world, our average house price growth has been remarkably stable and above inflation. “We’re definitely not at the high point of a cycle, but we’re also very far from our lowest moments, and trends suggest growth is heading upwards, not down.” Interestingly, the trends that dominated the property market in 2011 are still very much in play today, including the growth in demand for retirement estates and sellers struggling in a buyer’s market. Between 2011 and this year, however, it was a case of all change for the market as South Africans adapted to shifting needs and rollercoaster economic conditions. In 2013, for example, it made more sense to rent than buy a property, a phenomenon that has been turned on its head over the past few months. Another point to note is that, from 2015, technology was slowly introduced into the global property market and the first virtual reality searches were used for home viewings. Six years later, technology has become the norm for use by estate agents as well as buyers and sellers. Virtual reality goggles, however, are yet to be implemented on any noticeable scale – if at all.
ANNUAL TRENDS AND HOUSE VALUES FROM 2011 TO 2021
2021
Average sectional title home price: R1 267 744 Average house price growth: 4.5% (as at the end of March) OVERVIEW: It is still early days, but so far, this year saw the residential buying market start strongly following last year’s lockdown. Buyers still have the upper hand, while sellers are being forced either to accept much lower prices or hang on to their homes until conditions improve. The low interest rates are encouraging first-time buying activity which is reducing the number of good tenants available to take up the large number of vacant rental properties on the market. TRENDS: • Remote working becomes a more regular occurrence or even a permanent set-up for South Africans, leading them to consider a more formal workplace within the home. • Landlords have to do more to woo and keep good tenants, including not increasing rents but rather reducing them. • Retirement property developers are forced to rethink their designs and offerings in a post-Covid world which requires more social distancing. • Homeowners place more importance on space, both inside and outside the home. • Many people move away from the cities because remote working allows them to live wherever they want to live.
2020
Average residential property price: R1 213 153 Average house price growth: 3.7% OVERVIEW: The property market came to a standstill last year following, first, the complete
shutdown of the industry, at the introduction of the lockdown, and then Deeds Office delays. Fortunately, though, the pent-up demand as a result of the restrictions saw the industry rebound once it was allowed to operate fully. This, combined with declining interest rates, meant the year ended on a high for the market. TRENDS: • Affluent investors made an early move from equities to luxury bricks and mortar, which is regarded as a safe haven in turbulent times. • Landlords struggled to collect rents from tenants due to financial difficulties related to reduced salaries or job losses. • The banks were keen to grant new home loans. • Many buyers and tenants were looking for properties with more space to support social distancing and allow more comfort at home.
2019
Average residential property price: R1 169 868 Average house price growth: 3.1% OVERVIEW: This year was dismal for property with the harsh economic climate spewing out low – and declining – house price growth, rising levels of emigration and local markets that were either stagnant or barely ticking over. Load shedding was also a major concern for South Africans. However, the Rugby World Cup win was a highlight that helped restore confidence in the local market and attract the attention of foreign investors. The interest rate cut in July helped bolster the market. TRENDS: • Moody’s downgrade of the country’s investment status from “stable” to “negative” was a knock to investor confidence in the local market. • Smaller units started coming Continued on pg4
DISCLAIMER: The publisher and editor of this magazine give no warranties, guarantees or assurances and make no representations regarding any goods or services advertised within this edition. Copyright ANA Publishing. All rights reserved. No portion of this publication may be reproduced in any form without prior written consent from ANA Publishing. The publishers are not responsible for any unsolicited material. Publisher Vasantha Angamuthu vasantha@africannewsagency Executive Editor Property Vivian Warby vivian.warby@inl.co.za Features Writer Property Bonny Fourie bronwyn.fourie@inl.co.za Design Kim Stone kim.stone@inl.co.za
