South Africa’s housing market is under severe pressure due to the continued coronavirus lockdown, Remax’s latest housing market report shows.
The report, which covers home sales in South Africa from January – March, shows that the property market has been directly impacted by the lockdown despite the fact that it only came into effect at the end of March, said Remax regional director Adrian Goslett.
“According to Lightstone Property data, a total of 37,609 bond registrations were recorded at the Deeds Office over the period of January to March 2020,” he said. “This translates into a 5.6% decrease in the number of bonds registered YoY and a 1.2% decrease QoQ.”
Goslett said that the number of transfers (both bonded and unbonded) recorded at the Deeds Office between January and March amounted to 51,315, which is a 10.5% decrease from last year and an 18.7% decrease from Q4 2019.
These figures all suggest that concerns around Covid-19 have already slowed activity within the housing market, he said
Sectional title vs freehold prices
Remax’s data shows that sectional titles seem to have been affected the worse by current market conditions.
Reflecting a significant decline, the national median price of sectional titles dropped by 8.2% to R963,971 from the R1,049,810 reported in Q1 2019 and dropped by 5.9% since last quarter.
“The average bond amount granted during this period decreased by 1.2% since last quarter to R1,098,000 and by 0.4% since Q1 2019. This might reflect the slight downward pressure on property prices,” said Goslett.
By comparison, the current national median price of a freehold home has grown to R1,183,943 which is a 5.5% increase on the median asking price for Q1 2019 (R1,122,349). When compared to last quarter, the median asking price increased by 4.6%.
Of the 51,315 transfers, a total of 24,290 freehold properties and 14,354 sectional title units were sold countrywide (these figures exclude estates, farms, and land only transfers).
In contradiction to the price performance of each segment, the number of freehold properties sold decreased by 12.4% YoY while sectional titles only saw a 0.2% decrease YoY, Goslett said.
Properties below R400,000 continue to account for the largest portion of sales at 29.2% of the total transfers.
By comparison, properties between R400,000-R800,000 make up 24.2% of the total transfers, which is slightly less than the 25.8% for which properties between R800,000 and R1.5 million account.
Properties between R1.5 million to R3 million accounted for 15.8%, while properties priced above R3 million account for 5% of the total transfers.
“Considering how poorly our economy is performing, one might expect to see a decline in activity within the higher price bands. However, the current figures do not reflect that any one price band has seen a significant shift in market activity,” said Goslett.
“The results of the first quarter paint a picture of what is ahead,” he said.
“My prediction is that we are likely to see even slower growth in the next quarter as our economy recovers from the lockdown and the other fiscal consequences of Covid-19. That being said, I am confident that investors will stand to make good returns by purchasing property now.”