If 2020 taught us anything about life in general, it was that the only certainty is uncertainty. For property predictors, who are annually canvassed by Private Property for their take on the forthcoming year, there is some obvious caution yet optimism prevails. As a collective, the property agency heads interviewed for their 2021 predictions present well-considered opinions; they have weighed up the impacts of an impaired and distressed economy with market sentiment.
Rawsons: Tony Clarke, Managing Director:
Overview: All signs point towards a continued steady market recovery, a surge that has been motivated by the record-breaking low interest rates, excellent value-for-money homes on offer, and lenders offering up to 100% bonds to qualified buyers. As this momentum continues, property prices will begin to climb, which is a natural response to increase in demand and a decreasing oversupply.
Interest rate: This will likely start to rise mid-2021, but not dramatically enough to offset the currently favourable buying conditions. Trends: I see more affordable, management properties being sought, which are easy to rent out. A focus on cutting-edge security and location remain draw cards, particularly properties located near trendy neighbourhoods. The home-office will continue to create the need for an extra room or spacious living area, which will play a big role in buyer’s choices and homeowners renovation decisions.
Technology: The shift to online consultations, virtual reality, digitised documentation and more efficient, professional instant communication will continue, and will likely force the real estate industry to operate somewhat differently even post Covid-19 concerns and restrictions. These will however build on the foundation that was laid last year, which will make for a more efficient, convenient and flexible property experience in the future.
Lew Geffen Sotheby’s International Realty: Yael Geffen, CEO
Overview: The pandemic will still remain a major influencer on the market. Buyers will continue to look for homes with different characteristics away from congested urban areas to suburban or even semi-rural environments. The luxury market will likely see more activity as sellers become more realistic about selling prices.
Interest rate: We have already seen how the record-low interest rate has boosted our flagging economy and stimulated the real estate sector with unexpectedly high sales volumes in the entry-to mid-market last year. I predict the interest rate will undoubtedly rise again but unlikely to in 2021. When it does, it will however be in small increments.
Trends: The trends created by the Covid-19 pandemic will become well-established and remain prominent for the next few years at least. These include larger living spaces, and more value place on outdoor and home office facilities. Multigenerational living will also increase. Lifestyle, lifestyle, lifestyle is quickly taking over the erstwhile favourite property mantra of position, position, position.
Technology: Technology remains pivotal as more people continue to work remotely. Digital signing of documents has already revolutionised admin processes. AI, Chat Bots and virtual experiences are becoming more commonplace, and more bespoke tech will be unveiled.
Wakefields: Myles Wakefield, CEO
Overview: It is likely that the extreme buoyancy of the property market experienced last year, will ease somewhat. As always, the stability, or otherwise, of our economy will play a role, just as much as the strength and decision-making of our country’s leadership will affect buyer sentiment.
Interest rate: The general consensus is that the interest rate will remain low, even if it edges up slowly and slightly. It remains a clear driver for buyers, particularly first-time homeowners.
Trends: We envisage a continuation of the global property trend where, in gated communities or complex living, densification is balanced with a host of communal lifestyle amenities. However, alongside that and against the flow, a demand for freestanding homes has emerged; a result of a global lifestyle rethink, particularly around home offices. Technology: It stands to reason that someone, somewhere, is conjuring up the next big techno-thing to facilitate or accelerate communication between buyers, sellers and consultants. This will continue to alter the property landscape.
SEEFF Property Group: Samuel Seeff, Chairman
Overview: The buoyant activity seen since mid-2020 up to R1.8-million (R3-million in upper income areas) will continue, with many first-time buyers moving from the rental market into their own homes. Interest rate: The interest rate will be the biggest influencer in the market and we expect it to remain at the current historically low level until the third quarter.
Trends: Given that the pandemic continues to confine people to their homes, lifestyle will be a main driver of property demand for homes with more garden space, bigger apartments, sea views, estate homes and more people will look to relocate to coastal and country hotspots. Technology: Technology continues to evolve making it easier for buyers to search for and view properties online from the comfort and safety of their homes including 360-degree walk-throughs and obtaining detailed information at the click of a mouse thereby making the home shopping experience easier.
RE/MAX of Southern Africa: Adrian Goslett
Overview: 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.
Interest rate: The interest rate is likely to remain low, with a possibility of a slight increase of around 0.5 points for 2021 but this should not have a great impact on the property market. The SA property market will continue to see high sales volumes in 2021 for as long as the interest rate remains favourable, and homeowners continue to adjust their lifestyles.
Trends: We can expect homeowners to spend their money on more home improvements and renovations rather than travel or leisure activities.
Technology: The use of technology like video calls, and other digital alternatives, will continue to help us work as remotely as possible.
Pam Golding Property Group: Dr Andrew Golding, Chief Executive
Overview: With the economy unlikely to return to 2019 levels until 2023 at the earliest, we can expect an ongoing headwind to the housing market, suggesting that the recovery the industry anticipated, may be somewhat slower. However, the market below R3-million will continue to perform well.
Interest rate: The Reserve Bank has indicated that rates may start to inch higher during the second half of 2021, however, depending on the strength of the economic and inflationary rebound, the first rate hike may be delayed even further.
Trends: Three significant shifts in the market in 2021 will change the property landscape: work-from-home, particularly the self-employed professional, the young start-up, and the cottage industry entrepreneur; the new ‘conversion model’, particularly precincts being transformed into smart, urban hubs for the younger generation; and sustainable homes will become more mainstream with an influx of more environmentally-conscious buyers.
Technology: Tech City lifestyle is emphasised with Cape Town is setting the bar as host to some of SA’s largest financial institutions. Tech talent seeks such environments that present smaller geographic footprints but within an environment that provides services and products such as fast broadband speeds but with an emphasis on health and wellness.
Chas Everitt International Property Group: Berry Everitt, CEO
Overview: The residential property market is expected to lose some of its 2020 momentum, even though inflation is likely to remain depressed. The biggest obstacle will be a predicted increase in the country’s unemployment rate, which has motivated banks to tighten up on their homeloan credit criteria.
Interest rate: Consumers will continue to react positively to the steep interest rate cuts of 2020 and we believe the interest rate will stay the same in 2021.
Trends: Smaller country towns and coastal areas will continue to see a surge of executive semigration as the remote-working trend gains ground, with a corresponding decline in housing inventory. We expect the number of distressed sellers to increase this year and bring more inventory to the market, and landlords to offload some of their rental properties. Developers will continue to concentrate on affordable, entry level homes and secure community living across the price spectrum.
Technology: It will continue to play an essential role in enhancing efficiency and effectiveness so that agents can deliver more valuable experiences to clients and receive more qualified sales leads. It will also improve the building of relationships and the securing of data in accordance with regulatory requirements.
RealNet estate agency group: Gerhard Kotzé, MD
Overview: Obviously Covid-19 and its ongoing effects on the economy will play a major role. Greater unemployment will make the banks more cautious about granting home loans or funding new developments. The number of distressed sellers will increase, which will keep a tight lid on home prices. Sales volumes will moderate considerably from the highs of July, August and September of 2020, and we expect the average differential between asking prices and selling prices to increase.
Interest rate: We do not foresee any change in the interest rate before 2022, but if it does move, we believe it will not be by much.
Trends: Three major trends that will emerge in 2021 will be:
Developments for young people especially of co-living urban complexes offering micro-apartments with many shared facilities; the conversion of many more CBD office blocks to apartments for sale and to let; and a huge increase in additions and alterations as many existing owners choose to upgrade/expand their homes rather than move.
Technology: Tech will continue to play a major role, not only in the real estate industry but in shaping the future of the whole economy, in SA and across the world.