Global and local events over the past two years have “turned the property market on its head” as people are buying and selling their properties for reasons they might not have before this period.
The pandemic, economic climate, security concerns, and changing lifestyles are behind most of the current market activity, while some of the usual push factors to selling are still in play.
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Emigration-related sales – while not yet on the increase – could also spike in the coming months. In the most recent FNB Property Barometer, senior economist Siphamandla Mkhwanazi says, in Q3 of this year, the “reason for selling” matrix remained broadly unchanged from the previous quarter, and it shows that sales are still elevated due to financial pressure.
There is also a “slowing trend” of emigration-related sales, although there are signals that these figures have now “bottomed out” and are starting to rise in some segments. “Notably, the KwaZulu-Natal region saw an increase in selling for security reasons, at 11% versus 8% in the previous quarter and 7% for the national average. It will be interesting to see whether this is a sustained trend or rather a knee-jerk reaction following the riots.”
Yael Geffen, chief executive of Lew Geffen Sotheby’s International Realty, says there are a number of common reasons for selling that generally aren’t influenced by the prevailing economic or political climate or current trends.
These are
• Downsizing once the children have flown the coop.
• Moving to a retirement home.
• Upgrading as one’s family grows and changes.
However, she notes that the pandemic, recent violent unrest and growing political and economic turmoil have “turned the market on its head since the beginning of 2020”. Major shifts in consumer behaviour, especially in the real estate industry, are now being seen.
“Lockdown restrictions sparked a renewed appreciation of larger and more versatile living spaces and also highlighted the advantages of self-sufficiency.
“Many people are now bucking the recent low-maintenance, compact home trend in favour of more traditional, spacious homes.” And with remote working the norm, Geffen says a growing number of people are looking to exchange city living for a more relaxed lifestyle and are either moving to the suburbs from the city or further afield to smaller towns and coastal areas.
“In fact, semigration is a major driving force in popular coastal towns like Plettenburg Bay where record sales have been recorded since the end of the hard lockdown in June 2020, with 2021 already looking to be Plett’s best year to date,” she says.
Re/Max offices in the Eastern Cape and Garden Route region have seen the highest boost in home sales, says Adrian Goslett, regional director and chief executive of Re/Max of Southern Africa.
“Year-to-date September, reported sales in that region are up by a massive 68%. This is followed by the Re/Max offices in the Northern Region which is up by 60% year to date. “However, our network has seen a boost in sales across the country... This hyper-activity is largely owing to the low-interest rates as well as a change in lifestyles brought about by the pandemic.”
One of the significant benefits of the prevailing low interest rates, says Andrew Golding, chief executive of the Pam Golding Property group, remains a large number of first-time buyers active in the market.
“This is a positive trend for the country in general as homeownership and a growing middle class are key factors contributing to economic growth and stability.
“This has had a knock-on effect across the market, unlocking sellers, who were unable to sell, to both realise their properties and utilise the proceeds to engage in a subsequent transaction including buying-up, which also unlocked additional upstream sellers.”
Unfortunately, though, with so many jobs lost during the past 18 months, Geffen says there are also more distressed sales.
She adds: “There are more sales due to people wanting more flexible accommodation which not only allows for remote working but also has space for extended family like elderly parents.
“And we have seen a spike in sales due to emigration and people wanting to cash in major assets and reinvest their money elsewhere, including off-shore investments.” While there have been some recent sales related to emigration, Golding says many people acquiring offshore property are not necessarily wanting to relocate or sever ties with the country.
“Rather, some are looking to acquire EU residency or citizenship in order to provide themselves and their children with opportunities to travel or work in Europe, or spend part of the year overseas. Others are looking for sound offshore investment opportunities as a potential property and currency diversification.”
He says Covid-19 has also sparked a significant shift in circumstances, priorities and lifestyles triggered by weeks, and even months spent more or less confined to home. This has prompted homeowners to make either new or long-planned changes to their living conditions.
“These decisions may in part be prompted by the marked deterioration in economic prospects resulting from the prolonged restrictions in business activity due to the lockdown.”