When statistics from ooba on home loans for the first quarter (Q1) of 2021 came out, there were some significant indicators of trends in the property market. Surprisingly, the market conditions have, in many ways, improved in comparison with preceding COVID-impacted quarters.
100% bonds are making sense (for you and the bank)
Since the SA Reserve Bank dropped the repo rate last year to an historic low, banks have lowered their prime lending rate, and so they have been more willing to grant bonds to first time property buyers.
This means greater interest from those thinking to buy property and lower risk for banks. It is no wonder, then, that the housing market has been extremely active and highly beneficial to those looking to buy a home (especially first-time buyers).
Another aspect driving activity in the housing market is the narrowed gap between the cost of renting and home ownership. Many people have realised that they can invest in real property at a rate marginally more expensive than they would pay for rent.
The average purchase price is up 13.8% (15.1% for first-time buyers) for Q1 2021 in comparison with Q1 2020.
Drastic shifts in housing market between Q1 2020 and Q1 2021
Just after South Africa first entered its level 5 lockdown in 2020, property prices were falling because of uncertainty while estate agencies and realty groups across the country were forced to a near-standstill.
The statistics, however, are completely contrary to what might be expected during a time of local and global uncertainty and economic downturn, especially when considering the events of the Great Recession of 2008.
Changes in lifestyle and work
The concept of the perfect home has changed significantly in the past year. With the onset of the pandemic, many people were forced to work and/or study from home, which led to temporary changes in the way people furnished and utilised their living spaces.
As it became clear that the pandemic was here to stay, many sought to make the arrangement a more permanent one. This meant that buyers started valuing remote living spaces and prioritising working infrastructure within the home, rather than depend on proximity to the city or office infrastructure.
Houses sold quickly at competitive prices
Due to new standards that have developed with regard to remote work and lifestyle changes, traditional holiday destinations have become potential living areas. This means that homes that are being sold at competitive prices in these areas are going quickly.
Properties in these areas are often priced higher, and so the increase in the average size of the bonds receiving approval (up 13.3% compared to Q1 of 2020) can be attributed to this shift in location.
A good property attorney has never been more valuable
For those wanting to have their bond issues handled in a professional manner, without any unnecessary delay that might jeopardise their dream purchase, a good property attorney is non-negotiable. Get in touch with us at Fox & Barratt Attorneys for this exact level of service.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)