If, and when, interest rates rise in 2022 remains a key consideration for those looking to invest in a new home. However, economists are predicting that we will not see pre-Covid interest rates for several years. This leaves a favourable environment for buyers and property investors alike.
Paul Stevens, CEO of Just Property, says he is expecting to see marginal interest rate increases during the course of 2022.
READ: Interest rate hikes amid tough economic conditions | Will SA's property market level out in 2022?
The base home loan interest rate is 7.25%, up 25 basis points since November 2021.
"Context is important when considering the impact of increases in interest rates on people’s appetite for buying. In practical terms, that means an extra monthly cost of R151 on an R1m bond and an extra R452 per month on a R3m bond. Due to this increase, we are expecting the sales market we have been trading in to start to slow down.
"As long as clients are showing that affordability is there, the banks will be willing to lend even with further possible rate increases in the coming year. That said, there does appear to be a slow down of bank approvals.
New investors entering the market
Stevens adds that the pipeline looks promising.
"Our demographics show that 15.6 million South Africans are aged 20 to 34. With the right economic opportunities, some of them will be entering the market as first-time buyers. Others who already own a home, are discovering property’s potential to create wealth. Instead of upgrading to a larger next home, they are starting to build property portfolios.
"The good news for new investors is that interest rates are favourable and the current slow rental growth is likely to improve over time.
Investment opportunities for 2022
It takes time to recover financially and, nationally, nominal house prices increased by 3% year on year in September 2021, slowing gradually from the pandemic peak of 5.1% in April 2021, according to FNB data. We expect this same sluggishness in 2022, says Stevens.
Looking ahead, there is real growth potential for landlords who invest in systems and properties linked to sustainability (for example, ensuring the availability of water and the production of energy).
When it comes to property listing searches, the following cities have come up as the most-search over the past year on Property24, giving a good indication of where people are looking to invest in residential property.
This charming 3-bedroom cottage is for sale in the vibrant Bo Kaap for R2.99 million. Listed as a gorgeous starter home near the CBD and at the foot of Signal Hill with a great AirBnb potential given its location. Click here to view.
- Gqeberha (Port Elizabeth)
A lovely and sunny, 3-bedroom cottage for sale in Richmond Hill for R1.08 million. Listing has large spacious rooms, wooden floors, and high ceilings. Click here to view.
This neat 5-bedroom home is full of character and sophistication is for sale in centrally located in the tree-filled neighbourhood of Westdene for R2.550 million. Click here to view.
This 5-bedroom home, for sale for R2.595 million in Upper Glenwood within easy reach of great schools, hospitals medical school and varsity. Click here to view.
A beautiful 7-bedroom home for sale for R2.75 million in Southernwood. This large property offers exceptional restoration potential and is well situated close to St Dominics hospital. Click here to view
READ: Tropical Escape | Affordable family homes in KZN South Beach under R4m
Stevens says property trends show that coastal cities will continue to see better performance from a property value perspective, and demand remains strong due to many people semigrating to the coast.
Hermanus currently has *191 new property listings, according toproperty24 Trends Data, with the average asking price for the area being R1.995 million. The average sale price per erf for 2020 was about R1.7 million, while Section Scheme Units for the same period is about R1.06 million.
Click here to see all the latest sale and asking price data for Hermanus.
South Africanswho can, seem to be in pursuit of a better work-life balance and have opted to relocate their families out of cities to places that are more conducive to this new hybrid work phenomenon.
"The Garden Route areas of George, Mossel Bay, Knysna, Plett have also seen great growth, with many people relocating to these towns.
READ:Garden Route 'stock shortages' | SA sees surge from big cities to smaller towns
“Considered to be the administrative capital of the Southern Cape, George boasts state-of-the-art infrastructure and a well-functioning municipality. Pair this with the ability to work from home and George all of a sudden seems like a beautiful, connected, safe and well-functioning place to live and work," he adds.
Property24’s data show the average asking price in George in 2021 to date has been R1.995 million, and the average selling price achieved has been R1.5 million. That amounts to an increase of 17.03% in volume of sale from 2020, with a substantial part of the year still left.
Garden Route currently has *2 010 new property listings according to Property24 Trends Data, with the average sale price per erf for 2020 was about R1.272 500 and per sectional title for the same period was about R1.107 million.
Click here to see all the sale and listing price trends in Garden Route.
"In the Eastern Cape, Port Elizabeth, Jeffrey’s Bay and St Francis Bay are enjoying unprecedented growth in numbers of people relocating and looking for that coastal quality of life.
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*Property24 Listings Data Disclaimer: The trends detailed in this article are based on Property24 listings, current at the time of publishing, and property transfer data supplied by Deeds offices, which typically take 3-4 months to reflect. Suburbs are listed according to Property24's geographical database. In some areas this will include both commercial and residential properties. The age demographic data of buyers, sellers and stable owners is determined over a six-month period. These Property Values should not be used as a substitute for independent professional advice and is subject to Property24.com Terms and Conditions.
