How the prolonged lockdown has changed house prices in South Africa

Remax’s latest housing market report shows that rather than subsiding to pre-Covid levels of activity, the property market continued to exceed expectations in the third quarter of this year.

The report, which covers home sales in South Africa from July – September, shows that the property market has rebounded and expanded on the back of historic low-interest rates and pent-up demand, in line with previous Remax forecasts.

“However, what could not have been expected was that this period of hyperactivity would last as long as it has,” said chief executive of Remax Southern Africa Adrian Goslett. “It is now a full year later, and we are still seeing record-breaking sales volumes,” he said.

Lightstone Property data shows that 44,215 bond registrations were recorded at the Deeds Office from July to September 2021. Remax said this figure is 9% up from the last quarter and 20% up on Q3 2020’s figures.

The number of transfers (both bonded and unbonded) recorded at the Deeds Office between July to September amounted to 60,025. This amount is 2% up on last quarter and 25% up year-on-year.

Of the 60,025 transfers, a total of 29,553 freehold properties and 14,977 sectional title units were sold countrywide. The number of freehold properties registered increased by 20% year-on-year and remained steady quarter-on-quarter. Sectional titles increased by 17% year-on-year and 2% quarter-on-quarter.

House prices 

Along with an increase in the number of transactions, house prices also climbed steadily in the third quarter of this year.

Lightstone’s data shows that the nationwide average price of sectional titles for Q3 2021 is R1,056,417, an increase of 9% compared to the same period last year.

The nationwide average price of freehold homes is R1,352,712, which is a 2% increase compared to Q2 2021 and a 21% increase compared to Q3 2020.

According to Lightstone, year-to-date, the average price change per annum for sectional titles is 6% and 12% for freehold properties.

“House price appreciation is strongly linked to the rules of supply and demand. When buyer activity is high, sellers are more likely to achieve higher asking prices. This then causes greater house price appreciation until the demand levels out,” Goslett said.

“Lightstone Property data also reveals that the average bond amount granted during this period amounted to R1,287,000, up 16% since Q3 2020.”

Sales priced between R800,000 and R1.5 million continue to account for the largest portion at 26.7% of all transfers occurring in Q3 2021. Transfers between R400,000 – R800,000 follow close behind this at 23.1%  of the total transfers.

Following this figure were transfers priced below R400,000, which now account for 22.9% of all transfers in Q3.

“Sales between R1,5 million to R3 million accounted for 20.1%* and those priced above R3 million accounted for 7.2% of the total transfers this quarter, which is a healthy figure for this market segment,” Remax said.

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How the prolonged lockdown has changed house prices in South Africa