The South African property market went from a multi-year market contraction straight into the chaos wreaked by the coronavirus pandemic. While experts were cautiously optimistic for a market recovery post-lockdown, the economic crisis, unprecedented unemployment levels and reduced consumer spending promised a long and slow return to healthy growth.
However, recent statistics recorded by the Rawson Property Group suggest the light at the end of the tunnel may be closer than anyone thought.
“After a long period of not being able to finalise any property transactions, we were all hopeful for a small rebound when lockdown restrictions on real estate lifted,” says Tony Clarke, MD of the Rawson Property Group. “What we didn’t expect was for June to be our best sales month in over three years and the second-best sales month in the history of the Rawson Property Group.”
While Clarke acknowledges that a backlog of deals pending in May could have contributed to the flood of transactions finalised in June, he says the momentum has shown no sign of slowing.
“So far, July has been even busier than June, suggesting that the rebound is only just getting started,” he says.
The activity boost isn’t limited to major centres, either. Clarke says Rawson’s sales figures show transactions in all regions and price bands picking up proportionally. Even the luxury market – typically the first to suffer during times of economic and political uncertainty – shows an uptick in activity compared to averages over the last year.
“Our busiest market segment is still the under R1 million price bracket, which made up around 42% of our sales this June,” says Clarke. “The R1 to R2 million range is our next most popular, making up 38.4% of June’s sales, with the higher price brackets comprising the rest of the month’s transactions.”
As for the reasons behind the surge in market-wide activity, Clarke says the unprecedented combination of low interest rates, increased lending and excellent value for money on offer all play a role.
“Affordability is still an issue from an income stability perspective,” he says, “but those with steady employment and a good financial track record can get extraordinary bang for their buck these days. Interest rates are at record lows with the Reserve Bank cutting the interest rate by a further 25 basis points. This takes the repo rate to 3.5% and prime lending rate to 7%. Lenders are extremely motivated by this and offering amazing rates to qualified buyers, and properties are exceptionally well priced after an extended period of slow growth.”
Foreigners, too, are finding great value in South African property, with the weaker rand creating unbeatable opportunities for those with stronger currencies. This, Clarke says, could further bolster the luxury market once borders reopen for international travel, although this growth will likely remain modest compared to the more affordable segments of the market.
“All things told, there has seldom been a better time to invest in property, whether as a first-time buyer or a seasoned investor rounding out a portfolio,” says Clarke. “It’s heartening to see South Africans recognising this opportunity and getting in on the action. They’ll certainly be reaping the rewards if this rebound continues as dramatically as it has so far.”