After the end of the unprecedented 2020, Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, looks ahead and predicts yet another year of mixed results as we continue to navigate through the aftereffects of the national lockdown and continue to battle against the pandemic.
Low interest rates mean high sales volumes
“Interest rates are likely to remain low in 2021. There is the possibility that there will be a slight increase of around 0.5 points for 2021, but this should not have a great impact on the property market. As things stand, the low interest rates (in conjunction with other factors) have created a housing market boom, particularly within the first-time buyers’ market. Our reported sales figures year-to-date for October is up by 3% from last year. This is following three months during hard lockdown (from April to June) where our sales figures dropped by as much as 62% YoY. Our prediction is that the Southern Africa property market will continue to see these high sales volumes in 2021 for as long as interest rates remain favourable and homeowners continue to adjust their lifestyles to suit the post-lockdown world,” says Goslett.
A struggling economy means lower house price growth
“The negative state of the economy is likely to lead to an increase in the number of home sales which, in turn, will keep property price appreciation pegged back. According to our National Housing Report for Q3 2020, the median asking price of sectional titles reflected a 5% drop YoY and freehold homes reflected no growth but remained steady year-on-year. The latest FNB House Price Index (HPI) reports annual house price growth of just 2.6% y/y in October. Until our economy recovers from the current pandemic, I predict that house price appreciation will remain low for 2021, reflecting a national average of roughly between 2-3% growth YoY,” Goslett predicts.
More home improvements and less travel & leisure
“For as long as the threat of infection remains, we are likely to see a trend of more people spending their money on home improvements and renovations instead of using their money to travel or for leisure activities,” Goslett predicts.