The recent interest rate hike, growing limited inventory for buyers, higher prices, and the continued flexibility to work remotely will see the housing market level out in 2022 from the growth experienced in the past year.
Although things might level off a bit, it by no means will turn down, the growth in property prices and trends like first-time homebuyers joining the property market will continue, said Antonie Goosen, principal and founder of Meridian Realty.
“With the South Africa Reserve Bank (SARB) recently hiking the repo rate by 25 basis points to 3.75%, placing the prime lending rate at 7.25%, the first repo rate hike in nearly three years, there will be some pressure on homeowners, but it would be premature to increase rates again in 2022.
“South Africa’s economic outlook is not looking strong, with the July unrest, the pandemic and ongoing energy supply constraints still having negative effects on investor confidence and job creation. The hike in the repo rate might have been premature, inflation was flat for the past couple of months, and we need the repo rate to stay at low levels to support growth in the economy.”
Globally central banks are supporting economic growth and I am hoping that the SARB does the same in 2022 and that we will not see another hike in the repo rate, said Goosen.
He noted that if the prime lending rate stays at the current levels, and employers continue to give the flexibility to work remotely, there will be continued demand for home buying.
“Also, the ability of some to work from anywhere and the pursuit of a better work-life balance, will allow for the trend of people opting to relocate their families out of cities to smaller towns to continue in 2022. Housing stock shortages in the preferred new places will then also continue.”
Sonja Thielen, property specialist for Meridian in the Stellenbosch area, said she is seeing pace of sales in 2021 beginning to cool and that home buying will level off, but it will help to increase the number of homes for purchase.
With more stock on the market, prices should moderate marginally and the balance between sellers and buyers will normalise. “The higher interest rates could also result in a drop in prospective new purchasers and if inflation does not abate and there is another rate increase, it will take a toll on affordability,” said Thielen.
Goosen said he is expecting the trend of new property technology innovations to continue in 2022 and even pick up speed.
“Property tech is starting to transform the industry and many processes will become digital. Already we are seeing the rental property industry starting to change the mindset from being rental agents to becoming rental asset managers,” he said.
“With software available from companies like WeconnectU, they can act like asset managers who have the tools and software to deliver the monitored returns you would come to expect from a financial professional who manages money and securities on behalf of a client, with the goal of growing the value of the assets.”
Goosen said that the trend of digital services will continue to grow and create efficiencies to allow property professionals to focus solely on the interpersonal aspect of the business.
He added that with more millennials becoming homebuyers the trend of touring properties virtually will grow.
“Investments in high-quality photography, virtual tours and short films of the neighbourhood to provide buyers with a true sense of where they will be living, will be a growing trend.
“We will continue to see more investors embracing 3D virtual tours. I think 3D is just scratching the surface of what is possible and in the coming years, I am expecting most properties to have a 3D tour for clients,” said Goosen.