Real estate agency predictions for 2022

Real estate agency predictions for 2022

Private Property South Africa
Sarah-Jane Meyer

Surprisingly, 2021 was a good year for property, despite the challenges resulting from the ongoing Covid-19 pandemic, the riots in July and the shrinking of the gross domestic product (GDP) in the third quarter.

In March 2020, the start of the hard lockdown, most people in the industry predicted that the property market was likely to crash, along with everything else. But it bounced back and performed better than in pre-pandemic years. With the July riots, most people again predicted that the market would take a knock, but it remained strong, and the impact was hardly noticeable.

Record-low interest rates and broad lifestyle changes increased buyer activity that kept the real estate market ticking over. As a result, several real estate agency groups even reported record sales in 2021.

So what do agency principals predict for 2022?

  • RE/MAX of Southern Africa

Regional Director and chief executive of RE/MAX of Southern Africa, Adrian Goslett, believes the most significant threat is the possibility of an ongoing interest rate hiking cycle.

“I hope that any interest rate hikes in 2022 will do no more than bring buyer activity back to normal volumes,” he says.

Another threat to the property market is the overall state of the economy. The housing market is closely linked to economic performance. Goslett believes the rental market will likely struggle unless the economy recovers in the new year as low affordability levels continue to put downward pressure on rentals.

  • Seeff Property Group

Samuel Seeff, chairman of the Seeff Property Group, says the interest rate remains a game-changer. However, he believes the outlook for the market in early 2022 is positive, and the group expects more of the same excellent results as in 2021.

“Notwithstanding the recent increase, the interest rate and favourable mortgage lending climate will remain a game-changer for the market. We hope the SA Reserve Bank will limit any increases as property is a vital element of the economy and has a significant multiplying effect with widespread economic and skills benefits.”

  • Pam Golding Property Group

Dr Andrew Golding, chief executive of the Pam Golding Property group, believes that interest rates are likely to be increasing. However, he says the slow rate of increase suggests this will remain a benign environment for the housing market, with interest rates expected to rise gradually in small - 25 basis point - increments.

“The emergence of the Omicron variant and the arrival of the fourth wave of Covid infections may well delay the timing of further interest rate hikes. However, the sluggish economy is likely to be a headwind."

He says there has already been a drop in demand from first time home buyers as the effects of the aggressive interest rate cuts early last year abated.

“Consumers are currently dealing with the economic fallout of loadshedding, the pandemic and subdued growth prospects. That said, SA's young population does mean there will always be a steady demand from young individuals who can afford to buy a home.”

  • Rawson Property Group

Tony Clarke, managing director of the Rawson Property Group, expects a slow rise in interest rates to take off in the second quarter of 2022, with two or three small, incremental increases over the course of the year.

“We don’t expect this to have much impact on property demand at this stage. Consumers have proven to be very resilient, and their confidence in property as an investment remains strong,” says Clarke.

“Lenders are also expected to remain bullish in 2022, with up to 105% mortgages likely to be available for some time to come.”

Despite favourable property market conditions, consumers face high financial pressure, making affordability challenging in 2022. As a result, Clarke expects an increase in collective property ownership as a means to maximise investment opportunities.

“Banking products designed for collective property purchases are largely targeting low- to middle-income consumers at present. They're beneficial vehicles for broadening access to property as an investment, but need to be handled carefully to minimise risk for participants,” says Clarke.

  • Chas Everitt International Property Group

Berry Everitt, chief executive of the Chas Everitt International property group, believes that interest rate increases in 2022 will be less than one percentage point at a time and will not significantly affect housing demand.

“Although this has tapered off a little since the last half of 2020, it has remained at a multi-year high, so stock shortages are now evident in most sought-after areas. Also, as we predicted, prices have generally risen more rapidly than consumer inflation in 2021.

“The demand initially largely driven by first-time buyers has had a knock-on effect right across the market, with many repeat buyers now choosing to move. Listing times are much shorter than they were pre-Covid and competing offers are again quite a frequent occurrence. The result is that the average difference between listing and selling prices is steadily shrinking.”

He expects rising interest rates and prices to decrease buyer affordability and make it more challenging to qualify for home loans. Rising unemployment is also a concern. However, he says that banks are still keen to grant home loans. As a result, he expects eager buyers to adjust and buy smaller homes or in less expensive areas.

“The demand for sectional title units in secure complexes has risen steeply in recent years, and sectional title sales as a percentage of the whole have doubled to around 30%. Gated lifestyle estates in and around the big metros have been popular in the past two years, thanks to remote working and online education. Many estates now have back-up power, water and internet systems that enable residents to avoid the worst of the current Eskom and municipal supply interruptions.”

However, Everitt says families moving to ‘zoom towns’ in country areas or along the coast are showing renewed interest in stand-alone, suburban homes that offer more privacy, no levies, and increasingly, the opportunity to take their homes ‘off the grid’.

“We believe this will be a rising trend in 2022,” says Everitt.

  • Lew Geffen Sotheby’s International Realty

Yael Geffen, chief executive of Lew Geffen Sotheby’s International Realty, says: “Because people haven’t really been buying for four years, since the market started to slow down in 2017, I expect pent-up demand to continue well into 2022 and beyond.

“And, with Covid having opened the door for better living, many people are looking to change homes for a better lifestyle. Some are swapping apartment living for more space, and many of those who can continue working remotely can now live where they choose to rather than close to work.”

She believes semigration will continue to happen, and the small and coastal town's market will continue to thrive. Along the Garden Route, Plett has already had a record-breaking year, and Knysna is experiencing stock shortages for the first time in years. The Cape West Coast is also attracting considerable investor interest, especially in Langebaan, Paternoster and Yzerfontein.

“We also mustn’t forget that the property market is cyclic, and the last boom was 2016. This means we were due for an upturn, especially at the top end of the market, which, until recently, has been especially slow.

“We are likely to see further stock shortages, particularly in the most sought-after coastal areas, which always causes a property uptick - and price increases follow.”

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