2022 Estate Agency Forecast – South Coast Herald
Surprisingly, 2021 has been a good year for real estate, despite the challenges resulting from the ongoing Covid-19 pandemic, the July riots and the contraction in gross domestic product (GDP) in the third quarter.
In March 2020, at the start of the lockdown, most people in the industry predicted that the real estate market was in danger of collapsing, along with everything else. But it rebounded and performed better than in the pre-pandemic years. With the July riots, most people again predicted the market would take a hit, but it remained strong and the impact was barely noticeable.
Historically low interest rates and sweeping lifestyle changes have increased buyer activity, keeping the real estate market Walk on. As a result, several groups of real estate agencies even recorded record sales in 2021.
So what are branch managers planning for 2022?
RE/MAX of Southern Africa
Regional Director and Managing Director of RE/MAX Southern Africa, Adrian Goslett, believes the most significant threat is the possibility of a continued cycle of rising interest rates.
“Hopefully any interest rate hikes in 2022 will just bring buyer activity back to normal volumes,” he says.
Another threat to the real estate market is the general state of the economy. The housing market is closely linked to economic performance. Goslett thinks the rental market is likely to struggle unless the economy recovers in the new year as low levels of affordability continue to put downward pressure on rentals.
Samuel Seeff, chairman of the Seeff Property Group, says the interest rate continues to be a game-changer. However, he believes that the market outlook at the start of 2022 is positive and that the group expects more of the same excellent results as in 2021.
“Despite the recent increase, the interest rate and favorable mortgage climate will continue to be a game-changer for the market. We hope the SA Reserve Bank will limit any increases as property is a vital part of the economy and has a large multiplier effect with widespread economic and skill benefits.
Pam Golding Real Estate Group
Dr Andrew Golding, managing director of the Pam Golding Property group, believes interest rates are likely to rise. However, he said, the low rate of increase suggests it will remain a benign environment for the housing market, with interest rates expected to rise gradually in small increments of -25 basis points.
“The emergence of the Omicron variant and the arrival of the fourth wave of Covid infections may well delay the timing of further interest rate hikes. However, the sluggish economy is likely to be a headwind .
He says there has already been a drop in demand from first-time home buyers as the effects of aggressive interest rate cuts early last year have waned.
“Consumers are currently dealing with the economic fallout from load shedding, the pandemic and dwindling growth prospects. That said, SA’s young population means that there will always be a constant demand for young people who can afford to buy a home.
Tony Clarke, chief executive of Rawson Property Group, expects a slow rise in interest rates to take off in the second quarter of 2022, with two or three small incremental increases over the course of the year.
“We don’t expect this to have much of an impact on real estate demand at this point. Consumers have proven to be very resilient and their confidence in real estate as an investment remains strong,” Clarke says.
“Lenders should also remain optimistic in 2022, with up to 105% mortgages likely to be available for some time.”
Despite favorable real estate market conditions, consumers are facing severe financial pressure, making affordability difficult in 2022. As a result, Clarke expects an increase in collective ownership as a way to maximize opportunities for investment.
“Banking products for collective real estate purchases currently largely target low- to middle-income consumers. They are advantageous vehicles for expanding access to home ownership as an investment, but they must be handled carefully to minimize risk to participants,” Clarke says.
Chas Everitt International Real Estate Group
Berry Everitt, managing director of real estate group Chas Everitt International, estimates that interest rate hikes in 2022 will be less than one percentage point at a time and will not significantly affect housing demand.
“While this has come down a bit since the last half of 2020, it has remained at a multi-year high, so stock-outs are now evident in the most sought-after areas. Also, as we predicted, prices generally rose faster than consumer inflation in 2021.
“Demand initially driven largely by first-time buyers has had a ripple effect across the market, with many repeat buyers now choosing to relocate. Listing times are much shorter than they were pre-Covid and competing offers are quite frequent again. The result is that the average difference between listing and selling prices steadily decreases.
He expects rising interest rates and prices to reduce affordability for buyers and make it harder to qualify for home loans. Rising unemployment is also a concern. However, he says banks are still eager to provide home loans. As a result, he expects eager buyers to adapt and buy smaller homes or in cheaper areas.
“The demand for sectional title units in secure complexes has risen sharply in recent years, and sectional title sales as a percentage of the whole have doubled to approximately 30%. Gated lifestyle areas in and around major metros have been popular over the past couple of years, thanks to remote working and online education. Many estates now have backup power, water and internet systems that allow residents to avoid the worst of the current Eskom and municipal supply disruptions.
However, Everitt says families moving to “zoom towns” in rural areas or along the coast are showing a renewed interest in free-standing suburban homes that offer more privacy, no levies and, more and more, the possibility of withdrawing their house from the network. ‘. “We think this will be an upward trend in 2022,” says Everitt.
Lew Geffen Sotheby’s International Realty
Yael Geffen, Managing Director of Lew Geffen Sotheby’s International Realty, says: “Because people haven’t really been buying for four years, since the market started to slow in 2017, I expect pent-up demand to continues through 2022 and beyond. .
“And, with Covid having opened the door to a better life, many people are looking to change their house for a better lifestyle. Some are trading in apartment living for more space, and many of those who can continue to work remotely can now live where they choose rather than near work.
She believes out-migration will continue to occur and the small coastal town market will continue to thrive. Along the Garden Route, Plett has already had a banner year and Knysna is experiencing stockouts for the first time in years. The West Coast of Cape Town is also attracting considerable investor interest, particularly in Langebaan, Paternoster and Yzerfontein.
“It should also not be forgotten that the property market is cyclical and the last boom was in 2016. This meant that we were to see a recovery, especially at the high end of the market, which until recently was particularly slow.
“We are likely to see further stock-outs, particularly in the more desirable coastal areas, which always drives up real estate – and price increases follow.”