7 Property Trends you can Expect in 2021
Despite the turmoil, 2020 was a positive year for the residential property sector which experienced an uptick in home purchases. A combination of all-time low-interest rates, a prolonged buyer’s market and an ongoing surge in first-time buyers should make for an interesting residential property industry in 2021.
According to property entrepreneur and Founder of Only Realty, Grant Smee, recent statistics indicate that first-time buyers are younger than ever before and in certain instances, it is now surprisingly cheaper to buy a property than to rent.
“In 2021, we anticipate that the higher end of the market will remain at around 20 to 30% less than in previous years. This is driven by affordability, stability in the market, an increase in emigration, and a lack of foreign buyers.”
Smee expects to see a price decrease of around 15 to 20% in properties in the mid-range of between R1.5million to R3million. “Fuelled by the lowest interest rates experienced in almost 50 years, the average house purchase price now sits at R1,304,756 according to ooba Home Loan’s latest statistics.”
Smee says that there is a unique equilibrium at play in the residential property industry. “Properties over R2.5 million still operate in a buyer’s market because of the higher price point while properties under R1.2 million operate in a seller’s market.” Adding to this, the majority home loan applications remain between R750 000 to R2 million.
Projected Residential Property Trends in 2021
1. Home is where the office is
“With the majority of the workforce still working from home, many are now investing in their homes to ensure that they are fit for both business and leisure. Finding themselves with a lot more time on our hands, some South Africans are also undertaking in home renovations and many are moving to new locations that can accommodate both their work and home life needs.”
He adds: “To scale back on price and get more space, many South Africans are moving to outlying areas as they no longer need to be close to the office. Here, buyers get a lot more ‘bang for their buck’.”
2. Trendy areas are more accessible
Sought-after suburbs such as Rosebank in Johannesburg, the Atlantic Seaboard and even Sandton are now more affordable and accessible than ever.
“Vacant offices are fuelling a surge in property developments and it’s an exciting time to be an investor. This month, Balwin Properties made history by reaching R1 billion in sales in just 45-days at their new development in Sandton, Wedgewood.”
3. Semigration continues
Remote working remains a key driver for relocation during the COVID-19 pandemic.
Smee notes continued interest from buyers in provinces such as the Eastern Cape, Western Cape and KwaZulu Natal. “Homes in the Western Cape are of particular interest with some sitting at price points that are still too high for local investors. These buyers continue to market to international investors.”
4. Co-living & micro-living on the rise
The need to reduce overheads in a volatile economy has led to a surge in the demand for co-living and micro-living spaces.
“Co-living can consist of residents who rent beautifully furnished private bedrooms and sometimes a bathroom but share kitchens and other rooms and amenities,” Smee explains.
“In most cases, co-living takes place between family and friends while micro-living apartments usually comprise of one bedroom, one bathroom and space-saving features that encourage minimalist living.”
5. Lifestyle estates in demand
A need for increased safety and security continues to drive young professionals, couples, and families to secure lifestyle estates.
“Gated communities are always in demand and we are seeing new and exciting developments on the rise.”
6. Scooping up distressed properties in 2021
“Expect to see an increase in distressed auction properties across the price spectrum in 2021 as the realities of the 2020 lockdown materialise. For those looking for a steal or a fixer upper, this avenue presents exciting opportunities,” explains Smee.
7. Investors beware
“Quality tenants are hard to come by even in the best of times. Be sure to conduct credit checks and ask for references. A full deposit is also of the utmost importance. To landlords with tenants who are struggling to make ends meet, try to reach a compromise and make sure that everything is in writing.”
Smee concludes that while virtual showhouses remain a trend, the true value of a property is best determined by visiting the site. “We encourage potential buyers to visit properties prior to making an offer. Remember, an Offer to Purchase (OTP) is legally binding.”