Residential market bouncing back but overall trend still negative
While the local residential property market bounced back in 2021 from the Covid-induced blues of 2020, it is yet to be seen whether the market continues to improve and grow or reverts to its gentle, downward trajectory of the last five years.
Source: magiceyes © 123RF.com
Hayley Ivins-Downes, head of digital at Lightstone, said that property transfers totalled 318,152 in 2021 as pent-up demand from 2020 – when hard lockdowns severely impacted the market – came through the system. However, she said the average of 2020 and 2021 would still have represented a decline from 2019, which itself was significantly down on 2018’s 326,035.
Tough economic conditions and political and economic policy uncertainty continued to undermine confidence in many spheres of activity, including the residential property market.
Until the macro environment improved, Ivins-Downes said it was unlikely the property market would either, although “there have been pockets of resilience and growth in certain geographical areas and price bands”.
Gauteng (see graph below) remained the province with the most property activity, with 129,960 transactions in 2021, just short of the total number recorded in 2018.
The Western Cape was next highest, with 76,941 transfers registered in 2021, significantly up on the 54,400 transfers in 2020 and the best year since 2016. In fact, 2021 reversed four years of decline, and a combination of low interest rates, better run municipalities and work-from-home / semigration would more than likely account for the change.
Transfers were also up in KwaZulu-Natal in 2021 but remain just below 2018 levels.
Growth in high-value and upwards
While the residential property trend is negative, there are pockets where recoveries have been stronger, and performance has been good.
Ivins-Downes said this was not true of the low-value market which had declined significantly in recent years. In 2021, 53,384 transfers were registered as compared to a six-year high of 82,985 in 2016. The mid-level market, however, recovered to just above 2016 levels, although as the graph below shows, the performance across all five bands is poor to pedestrian, with just the high-level band performing positively.
In fact, high-level transactions in 2021 were at a six-year high, as was luxury by a few transactions and super luxury was not much short of its high in 2016. The data confirms that it is the middle-class and wealthier homeowners who are better weathering the economic storms.
Sectional scheme transactions slightly up as a %
Sectional scheme transfers account for 30.7% of all transfers in 2021, nearly 1.5% more than the 29.3% in 2016.
As you were! 2021 bounce numbers mirror 2016 in Cape Town
While the total transactions, freehold and sectional scheme numbers recorded in Cape Town in 2021 were similar to those recorded in 2016, they do not yet reverse the declining trend. The Western Cape has been the beneficiary of semigration but not to the extent yet that it is influencing the numbers upwards.
