In many ways, the Coronavirus has thrown people's lives in 2020 upside-down, to the point where the year has turned into a meme joke and a topic of conversation to be laughed about. A topic of conversation that is not so humorous is the impact that the virus has had on almost every industry in the world, to the point where industries' cracks and faults have been thrown into the limelight.
The residential property market is no exception to this in South Africa, although there are many reports claiming that the property market has remained strong (which it has, surprisingly), however, it is a little more complicated than that.
Like many other countries, South Africa's property market has remained particularly buoyant with residential assets holding their value and maintaining their value. This is a very upfront value, a real analysis shows that the property market should be gaining in value rather than remaining the same, According to FNB, from 2007 to 2019 home prices rose by 57% which may seem on par with expectations, however with the inclusion of inflation, home prices decreased 18%. According to FNB, when accounting for inflation in 2020 (in exclusion of the coronavirus outbreak), home prices fell by 1.22% in Q1 of 2020. Current reports are unsubstantiated due to the volatility and consistent change in dynamics in the market.
This is the gloom and doom aspect of the situation playing out in the market; however, South Africa is showing a major silver lining, affordability. Record-low interest rates from SARS to attempt to "liquify" the market, has given lower to middle-income earners a major opportunity to purchase a home that has lowered in the price bracket or remained the same. This allows these buyers to view homes that were previously out of their purchase bracket, or in a worst-case scenario, save on a house that these buyers were previously looking at in their price bracket and negotiate the price down.
On the other hand, buyers now could take advantage of the record-low interest rates. To receive a home loan today is exponentially cheaper than 2 years ago.
Taking into account all of the moving dynamics in the market currently, cracks have begun to show in the residential property market in South Africa, the average buyer feels unimportant when entering the market with the intention to purchase a home. This is opposite to the orientation of the market oversees this oversight must be changed.
Buyers have now become the center of attention due to the market shifting to a very strong buyers' market. This is an oversight that almost every real estate firm in South Africa is conducting, instead of focusing on profiling homes, the attention should be shifted towards the buyer. Where instead of profiling homes, buyers should be profiled and match a home with the buyer, not the other way around.
This is a very subtle orientation change but makes the world of difference.
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