Property 24/10 - 547
08 April 2021 00:00
This week on Property24.com: South Africans continue to shuffle the residential property market; five consecutive repo rate cuts have resulted in a massive shift in affordability; and expanding your property portfolio to the UK.
What South Africans are spending more money on than they were a year ago?
It is just over a year since South Africa went into hard lockdown. An expected 21 days of Stay at Home has turned into life with a pandemic and what we've come to know as normal is constantly being redefined.
The South African economy is clawing its way back to pre-lockdown levels, then already in a technical recession, with the lag factors of energy production weighing heavily on any growth.
The last two quarters of the 2021 financial year has had everyone in the property industry astonished at what an interest rate cut of 3.5% could achieve. The notion of pent-up demand has long been thrown out the window with everyone now asking how long this trend will continue.
A year later, South Africans continue to shuffle the residential property market. They are either downscaling due to financial constraints or spurring existing semigration trends to new heights as the shift in remote working has buyers looking for more space and an improved lifestyle as they work from home.
Now is the ideal time to make the switch from tenant to homeowner
Most South Africans aspire to own a home, but are still under the misperception that they are unable to qualify for a bond. According to research by credit bureau TPN, more than half of tenants don’t think that they can afford to buy. Younger tenants especially are concerned about affordability, with just over 60% of tenants between the ages of 18 and 29 years saying that they won’t be able to afford a bond. This drops slightly as tenants get older, with just over 50% of tenants in their thirties saying they can’t afford to buy.
But most of them can, says Carl Coetzee, CEO of BetterBond. “The five consecutive repo rate cuts of last year resulted in a massive shift in affordability.”
With the prime lending rate dropping to a record low of 7%, home buyers are now able to afford 30% more than they were at the start of 2020, when the prime lending was at 10%. Now is actually the most opportune time for aspirant buyers to apply for a bond.” BetterBond is seeing the uptick of bond activity in its application volumes, which increased by a record 53% in December - traditionally a quiet period. The trend is continuing into 2021, with a 46% increase in bond applications for March.
Want to expand your property portfolio to the UK? Key advice for South Africans'
Even on the brink of Brexit, 2021 is proving an interesting year for the UK property market as opportunities abound. The Greater London market has cooled but other regions of the UK have seen an increase in investment interest, according to the latest research by Rightmove.
“It is expected that in areas in the North, like Liverpool, property prices will be back to the same level in 2021 as before the crash of 2008,” says Doyle.
This is the word from Anthony Doyle, a director of UK-based property company Propwealth, who says UK property is no longer performing at the same level nationally, as yields have morphed to regional hotspot areas that are being driven by local economies and social upgrades.
“The savvy investor is realising this and seems to be focusing on very specific area-driven investments now,” he says.