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Five residential property trends no one saw coming

Posted by IOL Property on March 7, 2024

Specialists have already forecast the top property trends for 2024, which include the impact of impending interest rate decreases, co-buying, solar power finance, sectional title demand, and the revival of first-time homeowners.

However, some rising (and frequently missed) trends are likely to take effect, causing significant upheavals in the property environment.

“The top five trends for 2024 have been touched on time and time again, but our data has also pinpointed overlooked shifts in trends that will have an impact on the market throughout this year,” said Rhys Dyer, the chief executive of ooba Group.

Dyer said these are the five trends to look out for:

Average house prices begin to rise – albeit slowly

Following an all-time high in 2020 and 2021, when interest rates fell to a historic low of 7% and nominal property price growth surged to 9.37%, South Africa’s average home price began to flat line during the last two years, corresponding with interest rate hikes since the pandemic.

However, the market has begun to turn. Referring to the latest statistics from ooba Home Loan, Dyer noted that January 2024 saw record-high purchase prices recorded across both first and second time home buying segments January 2024 saw record-high purchase prices recorded across both the first and second time home buying groups.

“The overall purchase price paid rose to an all-time high of R1.49 million in January 2024 (+7.6% above year-earlier levels), while the average price paid by first-time buyers rose by a more modest +4.1% year-on-year, reaching a new high of R1.18 million.

“Perhaps the most confident statistic to come out of this would have to be the Western Cape where the average purchase price breached a whopping R2 million for the first time. This is followed by the Eastern Cape, recording an average purchase price of R1.57 million (up by 13% year-on-year),” he said.

Demand for holiday homes soars in the Eastern Cape

In 2020, the Eastern Cape surpassed the Western Cape as the region with the most applications for vacation home purchases, a title that the province has maintained in subsequent years.

“We attribute this to the recent trend of an increased number of foreign buyers purchasing second homes in the Western Cape, particularly along the Atlantic Seaboard and Garden Route,” commented Dyer.

“This has resulted in higher prices and reduced stock in these areas, leading locals with some extra money and a desire for a coastal home to look elsewhere.”

According to statistics from ooba Home Loans, these purchasers have gone to the Eastern Cape, which provides a comparable climate and natural beauty at a lower cost.

Holiday home applications in the region are presently at 1.7%, the highest level in previous years.

Free State emerges as a haven for first-time buyers

According to the most recent data from ooba Home Loans, the Free State is the only location in South Africa where first-time homeowners pay an average purchase price of less than R1 million.

As a result, young buyers are taking advantage of the discounts available in this region, with first-time home buyers accounting for 62.9% of all house loan applications in the Free State in January 2024, the highest rate of any region.

“First-time buyers are extremely price conscious, and this is evidenced by the comparatively lower volume of first-time homebuyer applications in the Western Cape (35.8%) where the average purchase price is the highest in the country, both for first-time (R1.58 million) and repeat (R2.01 million) buyers,” Dyer added.

Limpopo emerging as strong contender

While the Western Cape continues to have the highest average first-time buyer price in the country, Limpopo and Mpumalanga have seen significant year-on-year increases in their average first-time homebuyer purchase prices, putting them second and third highest in January 2024, respectively.

Limpopo’s property price performance has been so robust that in the previous two months, the average first-time homebuyer purchase price in Limpopo topped the regional average purchase price, at R1.39 million and R1.36 million, respectively.

Buy-to-let properties continue to climb

Despite the subdued investor mood that has afflicted South Africa in recent years, there is still growing demand for investment properties.

“One of the key drivers of the boom is undoubtedly the Western Cape, and I would go as far as to predict that in 2024 in excess of 30% of our home loan applications from this region will be from investors,” said Dyer.

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