The COVID-19 pandemic has given rise to significant shifts in the residential property market. In the beginning, many were scaling back to clamber back on costs, however, as interest rates continued to dip between 2020 and 2021, many started to upgrade their homes and invest in bigger spaces. Now, with rising costs and major pressure on consumers, the market is changing once again.

Grant Smee, property entrepreneur and Managing Director of Only Realty Property Group, says that despite higher costs of living and a quick succession of interest rate hikes, the market remains surprisingly resilient.  “While FNB’s latest Property Barometer indicated that the price growth of homes has slowed down (3.4% - down from 3.8% in May), there is still strong demand for homes as indicated in the market volumes that we are seeing,” 

“This remains area and price bracket dependant.”

Smee adds that competition between the banks to secure home loans still favours homebuyers. “The banks continue to offer attractive interest rate discounts. ooba Home Loans’ latest statistics indicate that its customers achieved an average rate discount of prime less 0.30% - meaning that it’s still affordable and accessible to own a home.”  

Upscaling, downsizing or semigrating?

Smee elaborates on key trends underpinned in FNB’s Property Barometer findings:

• Downscaling: “The data speaks for itself,” comments Smee. “20% of homeowners downscaled their homes due to financial pressure in Q1 ’22. Majority of the activity took place in the R750 000 and lower bracket as middle income earners have been heavily affected by economic pressure and are sensitive to rate increases.” Additional statistics have shown that 29% of homeowners in the R3.6 million-plus bracket are downscaling due to life stage. “This is typically the older demographic of new retirees looking to downscale their homes.”
• Upscaling: “Interestingly, 14% of homeowners are upgrading or upscaling. This is largely driven by the need to accommodate a growing family or choosing to run a business from a home office where more space is needed.”
• Semigrating: “13% of homeowners are relocating with many still looking to capitalise on the semigration trend. While majority of those moving are still heading to small coastal towns such as George, Hermanus and Plettenberg Bay, many Gauteng residents are seeking solitude and a change of scenery in Hartebeespoort Dam. Many of us still want to earn the larger salaries associated with living in the business capital of South Africa, but there is also a strong desire for a change of pace. In addition, Mpumalanga remains a popular in-land option and is currently showing strong returns on investment.”

Signs that it’s time to move

With a lot of activity taking place in the homebuyers market, Smee says that there are various signs that one should note and that these decisions should be strategic. “Whether your reason for moving is centered around upgrading, downscaling or even semigrating, it’s vital that you keep these factors in mind to reduce your home’s time spent on the market and increase your chances of receiving your desired asking price.”

“So often we see a strong emotional attachment to a home. While this is a good thing, it’s easy to miss the signs that could put the sale of your home in jeopardy. I always advise both buyers and sellers to think rationally, rather than based on emotion,” Smee adds.

1. Security is of concern: “It’s important that one keeps track of crime activities in their area. If you ignore the signs and wait too long, then it can become increasingly difficult to sell your home. At the same time, it’s important that you put all security measures in place to ensure that a new buyer wants to purchase the home and will feel safe in the area.”
2. The home requires a full-blown renovation: “In a case like this, the seller needs to the math. Is it better (and/ or easier) to renovate a home or is it easier to find something more suitable? Remember, over time your taste changes, but that doesn’t mean that the home won’t appeal to someone else. In a case where you do decide to go ahead with renovations, avoid overcapitalising and make sure to chat to an agent prior to going to ahead to ensure a strong return in future.” 
3. Areas on the rise: “Considering what we spend on homes, it might be a good idea to sell and invest your money into properties that will appreciate more in value over time. The properties in these areas are still generally selling for less so there’s a higher chance of making a bigger return when the demand creeps in. According to data by Lightstone, areas include Pennington, Mpumalanga, St Lucia and Stanford.” 
4. Capitalise on market demand: “Conversely, if you are in an area that’s currently in hot demand, it might be a good idea to consider selling your home. It is however vital that you chat to an estate agent to understand the projections and predictions for the area. Timing is everything” Smee concludes.