THE PROPERTY MARKET CONTINUES TO SHINE
Category Residential Property News
House price growth up...shorter time on the market... the property sector is on the up and up.
The property market is the rainbow in our storm. Not only buoyant, it's been consistently so for the past few months, a fact strongly supported by well-researched figures from the respected FNB Property Barometer.
Bottom line, the property market was not expected to have a price rebound. As FNB says, "Our initial expectations were for the pandemic to have a more chilling and lingering impact on activity, with demand picking up only later this year and into next year."
Myles Wakefield, CEO OF Wakefields Real Estate, concurs: "Although there are solid reasons for the market to be sparking like this - largely around increased affordability - the swiftness of the return was unexpected."
According to FNB's House Price Index, July's annual house price growth, year on year, was 1,8 percent. In August, that accelerated to 2,8 percent.
In addition, FNB's mortgage applications data - combined with that of mortgage originators - shows clearly that the volume of new mortgage applications surpassed pre-lockdown levels, reaching new highs in the last three months.
And the good news continues. New data from the FNB Estate Agents Survey shows that the average time a property remains on the market has improved. In the second quarter of 2020, it was 14 weeks and one day. It reduced to just 10 weeks and 6 days in the 3rd quarter of 2020. And, says FNB, "This newly found 'buyer exuberance' is evident across the price spectrum."
As we know, the interest rate is the lowest it's been for nearly 50 years, so clearly, prospective buyers have taken advantage of this. FNB believes that this factor, combined with lower prices in some suburbs (mainly affluent), and lower transfer duties has been the trifecta that's not only spurred on buyers, but turned renters into buyers too. Affordability is the key. FNB notes that the Deeds Office's preliminary data shows an increase in transaction volumes attributed to 'younger' buyers '(under 35 years), from 38 percent in 2019, up to 43 percent in 2020.
This 'young' age group are traditionally our 'renters', so if they're buying instead, it'll account for the rising vacancies in the rental market, as well as the better performance of house prices relative to rental prices. FNB isn't certain whether this is a transitory trend or a more fundamental shift in the property landscape. Only time will tell.
As Wakefield says: "There's no doom and gloom for this sector. The factors which make the property market attractive, are all there, and playing into the hands of both buyers and sellers. And it's happening at all levels of the market, too."
Author: Anne Schauffer
