Home prices slashed by up to 30% post lockdown
Yet another repo rate cut is on its way. Grant Smee, managing director, Only Realty and Founder of EPiC South Africa, believes that, while this will bring some relief to consumers in the short term, it will not have the immediate effect needed to stimulate the residential property industry.
Plan ahead
“We foresee an extended buyer’s market kicking in over the next six months, and we anticipate it to last at least 18 to 24 months,” says Smee.
“While the interest rate cut is favourable in the short term, buyers need to plan and budget for an expected increase in the medium to long term.” Some estate agents and property advisors will be quick to encourage buyers to take up an offer, but the low interest rates will not last forever.
“It is vital that buyers take into consideration what they can afford and to budget for future interest rate hikes,” says Smee.
Property projections
When looking to the future of residential property, Smee says various factors need to be considered. These include price, type, demographic factors, location and the local economy – ignoring pockets of excellence.
He notes that the decline in housing prices will also be affected by critical factors such as the length of the lockdown, the extent to which industries are limited in their operations, and the amount of relief provided. “We anticipate that the higher end of the market will drop by 20% to 30% for several reasons. These include affordability, demand and a shortage of foreign buyers. When we look to properties in the mid-price range of R1,5m to R3m, we expect to see a decrease of around 15% to 20%,” he explains.
“In the affordable housing market, we expect to see a 5% to 10% decline. Some areas may be less affected but, broadly speaking, the state of the economy, the diminished capacity of buyers to invest, and high levels of supply will ultimately lead us into an extended buyer’s market.”