2022 Property Trends - Good News for Everyone!
Category News
South Africa's housing market is in for a healthy 2022 with a number of aspirant homeowners expected to take their first steps on the property ladder. The recent interest rate increase will undoubtedly deter some buyers from taking the plunge towards personal wealth, but generally, rates are still low enough to fuel home ownership.
In recent years, a lot of emphasis has been put on the word "lifestyle". In 2022, a good lifestyle will mean to live, work and play at home. People will re-think their living spaces, especially when no one leaves the home during the day. There may also be a shift of focus from the individual to communal needs; families will become entities to consider as a whole rather than as individuals.
NEW BUYERS & ESTABLISHED OWNERS
In 2020 virgin homeowners were quick to seize the opportunities given with affordable repo rates and the chance to transfer duties, allowing them to get a foot on the property ladder. But existing homeowners were more cautious about making changes during the first year of the pandemic. This was possibly also influenced by a reluctance to sell during a buyers' market, but many were keeping a hold on stability during a very uncertain period.
But after taking 2020 to get comfortable with the ins and outs of a post-Covid world, homeowners hit the market in full force during 2021. While there are (always) some sellers driven by financial strain, the vast majority of LWP's buyers and sellers are now looking to upgrade to homes that better support their new lifestyles - more space to work and play, better entertainment facilities, and comfortable home offices for adults and kids alike are highly prized in the pivot to spend more time at home with our nearest and dearest. This greater desire for space saw freehold properties overtake sectional title sales by a wide margin in 2021. Statistics show a return to a positive trajectory that is expected to gain momentum in 2022 regardless of ongoing Covid-related issues.
PROPERTY PRICES
Sales statistics show a 2% year-on-year increase in average property prices from 2020 to 2021, and compared to 2019 there has been a 13% property price increase. Impressive for pandemic property, and proof that no matter what is happening in the world, people always need a home. This means they'll keep buying, selling and renting property, and LWP considers it our personal pride to take all these clients #BeyondTheSale with the safety measures that have seen our last two years climbing the record books, with properties' average time on market dropping by 44% in 2021.
Lower spend on travel, entertainment and eating out has also given some homeowners more disposable income, seeing an increase in renovations on properties to improve daily life but also resale values. It's great to see people investing in their main asset!
FUTURE-PROOFING
Important 2022 trends for future-proof renovation is to bear in mind the influence of millennials on the property market as the next big wave of buyers. Understanding how and where this age bracket likes to live is vital for sellers and agents hoping to tap into this growing market, and facilitate including them by spiking interest: community living, secure estates with facilities, smart technologies and sustainable living continue to be the highlights for this generation of buyers.
INTEREST RATE
With the Reserve Bank forecasting only marginal rate increases each quarter for the next three years, and interest rates unlikely to reach double digits before the end of 2023, there is still plenty of time to make the most of the favourable lending environment. We expect more tenants to consider the benefits of financing their own homes before the prime lending rate surpasses the 10% it was at the start of 2020. We still don't expect this to have much impact on demand at this stage consumers have proven very resilient and the national confidence in property as an investment remains strong.
Lenders, too, are expected to remain bullish in 2022, with up to 105% mortgages likely to be available for some time to come. While buyers with deposits will always get preferential interest rates, lenders are taking a more open-minded stance with low-risk applicants looking to maximise their buying power. There is definitely an inclination towards more transparent discussion and collaboration between lenders and applicants willing to do what it takes to improve their risk profile and application strength; this attitude extends to strained bondholders, who are receiving much more proactive support in overcoming challenges than they may have before the pandemic.
COLLECTIVE LIVING
Despite favourable market conditions, financial pressure on consumers remains high and affordability could become more challenging in 2022. Internationally as well as locally we see an increase in collective property ownership as a means to maximise investment opportunities.
The latest and most significant shift comes with banking products designed for collective property purchases, mostly targeting the lower to middle-LSM market at present, but with definite interest in fractional ownership from high-end investors too. This promises to be a useful vehicle for broadening access to property as an investment, but it obviously needs to be handled carefully to minimise risk for all participants - consider exit clauses, buying-out procedures, and every eventuality in case of worst-case scenarios, like mortality.
NEIGHBOURHOODS REVISITED
With the changes to at-home living and schooling systems, be prepared to ask your realtor for a little more insight into up-and-coming neighbourhoods. Without the need to live close to educational and work places, the bias towards traditional neighbourhoods is loosening, giving buyers and sellers an opportunity to develop new areas which are more affordable but aspirational in their growth!
Whatever it is you have in mind for your property portfolio in 2022 - whether taking the first step to create one, grow it, stabilise it, or diversify it - LWP's agents are ready to have their experience and expertise take you #BeyondTheSale and make it a stress-free and positive decision!
Author: LWP Properties