The 2020 property market is a tricky one to make sense of. With a pandemic raging on, economic fallout leading to retrenchments and growing unemployment, and a general uncertainty about what the future may hold, the real estate market is seeing record-breaking buyer activity. Discussing the reasons for this - and helping to make sense of ways to take advantage of the situation - is Pearl Scheltema, CEO of Fitzanne Estates.
“We’ve seen a 50% increase in sales over the past few months, compared to the same time last year,” Scheltema explains. She also highlights the clear interest from investors, particularly first-time buyers, who account for half the sales concluded.
Supply and demand
Ultimately, property prices, and the real estate market as a whole, is dependent on the basic economic principle of supply and demand. The COVID-19 pandemic, and subsequent national lockdown, has turned the established real estate landscape on its head, creating opportunities for savvy buyers. Demand has shifted, particularly due to a couple of key factors.
The prime lending rate has lowered from 9.25% at the beginning of the year, to 7% at the time of writing. This effectively means that a home loan - oftentimes a very real obstacle for those looking to climb the property ladder - is now a whole lot more accessible. According to Scheltema, around 80% of buyers are utilising home loans, with larger deposits being put down than this time last year.
Buyers are now also able to afford more, further driving up the property prices. Where you may only have been able to buy a small home a year ago, you may now be able to purchase a larger property with more space. This affordability also ties in with what buyers have come to value over the past months of lockdown.
Perhaps, having been stuck inside a small home during a long lockdown, you’ve now realised that you’d rather live in a more suburban area where you can have a large garden. Thanks to a lower prime lending rate, larger loans and, by extension, larger purchases, are now possible. Also due to a larger buyer pool, these shifts have led to property values rising in some areas, showing a resilient property market in markets that hold long-lasting appeal for first time buyers.
While settings that are heavily influenced by tourism or commercial property, for instance, may have seen a dip in asking prices, suburban homes with more space are becoming a hot commodity.
Scheltema advises both buyers and sellers to consult a qualified, experienced estate agent for advice on the current property climate. Fitzanne Estates specialises in guiding property owners in their real estate journey and are ready to assist you during this exciting yet confusing time.