First time buyers shopping up a Black Friday storm in SA
PUBLISHED 2 DEC 2020
Black Friday appears to have reached the housing market in 2020 as South Africans reach deep into their wallets and defy predictions of a COVID slump.
With bond applications up 9% year-on-year, buyers across the country are taking advantage of once-in-a-generation low interest rates to purchase homes - and new homeowners are leading the charge.
Let’s take a closer look at this positive trend and find out how long it might last.
Local buyers snapping up affordable homes
The years preceding the unprecedented coronavirus outbreak were not the best of times for residential property sales in South Africa. Even Cape Town’s famously resilient market struggled to reproduce the double-digit growth figures of the 2000-2015 period as commercial sales outpaced home purchases.
In 2020, this trend has completely reversed.
Household Mortgage Advances outpaced Corporate Mortgage Advances for the first time in years in 2020.
These indices - which measure the relative increase in bond applications - show a strong trend towards property financing among home buyers - especially in the sub-R3 million category.
Many first-time buyers are taking the opportunity to transition from tenants to property owners as interest rates remain at their lowest level in decades.
How long will the good news last?
While buyers, sellers, and estate agents celebrate the positive uptick in home sales, some industry experts are raising questions about the market’s ability to sustain this type of growth at a time when many sectors of the economy are struggling.
Although low interest rates are expected to persist for the next year or so, it remains to be seen whether new buyers can continue entering the market and successfully qualify for home financing at their current pace.
Whatever the future holds, this positive trajectory in property sales is likely to continue as long as interest rates remain low and prospective buyers enjoy a fair degree of job security or can show regular income to qualify for home loans.
With young professionals being less affected by COVID-related layoffs than workers in the industrial and mining sectors, there may still be scope for significant growth in home prices.
Record low interest rates present an ideal opportunity to invest in a Cape Town home. To view our portfolio of properties in the Mother City, contact the Cape Realty team today.
Image Credit: https://pixabay.com/photos/sale-sold-hand-signature-house-3701777/