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Property market under R3m most in demand

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Properties priced below R400000 continue to account for largest portion of sales and those above R3m the smallest

The property market might currently be characterised by slow national house-price growth, and a supply that far outweighs demand in most areas, but there has been growth in recent months.

The Re/Max National Housing Report for Q4 2019 reveals his period saw a higher price growth than the last quarter of 2018. This proves smart property purchases will always be a sound investment decision, even within slow market conditions, says Adrian Goslett, regional director and chief executive Re/Max of Southern Africa.

“The property market is very closely linked to the economic cycle. Right now, the market has been affected by the downward curve our economic cycle has taken, which means returns are not as high as we have enjoyed at other points in time. However, the market is still reflecting growth and promises good returns for those who purchase wisely.”

Data from the National Deeds Office, according to Lightstone, shows the current national median price for a freehold home has grown to R1.132million, which is a 5.8% increase on the median asking price for Q4 2018.

When compared to Q3 2019, the median asking price increased by 1.4%. Reflecting significantly lower growth, the national median price of sectional titles grew by just 0.3% (to R1.024m) from Q4 2018 to Q4 2019.

The report shows the average bond amount granted during Q4 2019 increased by 2.3% since Q3 to R1.11m and by 2.4% since Q4 2018. This, Goslett says, might be a reflection of the banks’ growing appetite for lending or it might indicate the rising cost of financing a property.

Properties below R400000 continue to account for the largest portion of sales, while those above R3m make up the smallest. “Based on last year’s sales, there has been a continued move towards smaller properties in secure/safe environments. Larger homes seem to be taking considerably longer to sell than in the past.”

Goslett believes the luxury market will continue to feel the pinch within this tight economy and the majority of transactions will continue to fall within the affordable price ranges.

After a “slow start” to last year, the combination of a mild improvement in demand, progressive mortgage lending and attractive market pricing supported the residential property in the second half of the year (H2 2019), reports FNB’s Property Barometer.

However, depressed labour markets “continue to weigh on household finances”. This poses a threat to sustained demand growth, says the bank’s property economist Siphamandla Mkhwanazi.

“Market strength indicators continue to show a narrowing demand-supply gap, which may have provided support to house-price growth in H2 2019.”

Area value bands suggest pressure persists in the affluent areas, while low-income areas have remained resilient. He says this is due, in part, to the divergent demand-supply trends in the respective segments. In Q3 2019, higher priced areas averaged -0.5% year-onyear, while low-income areas averaged 16.7%. 

“Sellers in the upper end have constantly had to reduce their asking prices to close deals, while low-income areas are also supported by robust buy-to-let activity,” Mkhwanazi says.

Lightstone data shows:

◆44808 bond registrations were recorded at the Deeds Office over the period of October to December 2019, totalling R49.785million. This translates into a 6% increase since Q4 2018 and a 9.7% decrease in the number of bonds registered since Q3 2019.

◆The number of transfers (both bonded and unbonded transfers) recorded at the Deeds Office between October and December 2019 increased marginally by 1.5% from 2018 and decreased by 10.7% from Q3 to 63110 transfers in the fourth quarter of 2019.

◆Of the total transfers recorded at the Deeds Office, 30390 freehold properties and 15921 sectional title units were sold countrywide.

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