The pandemic could reshape our local working landscape and with this, how people may choose to live.
While the full impact of Covid-19 is yet to be felt, it is creating opportunities throughout the residential property market and high up on this list is coastal property.
As South Africa moves down to Level 1, more and more families are looking to swap big city living for the coast.
Estate agents are reporting better than expected interest in popular coastal areas such as northern KwaZulu-Natal and the southern Cape coast which mirrors a trend from other countries where those who no longer need to be in the cities are opting for safer, more relaxing lifestyles in smaller towns or villages.
Those who are relocating are creating opportunities in the cities for existing homeowners to buy-up and for first-time homeowners to enter the market.
While changing work demands are encouraging a new look at coastal markets, all buyers are taking advantage of reduced interest rates at a fifty-year low and the price correction which has been underway for some time in the residential market.
While real estate agencies opened on the 1st of June, sales activity was surprisingly brisk once the ‘For Sale’ signs went up.
Recently, FNB said buyer interest on property portals and the volume of new mortgage applications had surpassed pre-lockdown levels.
However, Lightstone’s focus is on the coastal market where transfers (graph below) in the first quarter of 2020 were slightly down on the comparable period in 2019.
There is no further data available given that the Deeds Office was closed for some time but it is widely anticipated that the trend will swing the other way when the third quarter’s data is released and the impact of the reported activity feeds through the system.
Interestingly, total transfers were up in the first quarter and the expectation is that the third quarter will demonstrate the market’s resilience and show an increase on transfers registered compared to 2019’s third quarter.
The realignment of the work landscape and current sales activity suggests that professionals are looking to move in greater numbers, and this could help push grandparents still living in the cities to move earlier than they may have planned.
Professionals in their 40s and retirees are upsizing their coastal properties faster than other categories. The biggest single jump at 16% came from the 50-64 age group, up from just 3% in 2019.
At the other end of the market, lifestyle choices are pushing the more debt-conscious Millennials and Gen-X buyers (24-40 age group) to downsize their homes (graph below) in increasing numbers (from 8% in the first quarter in 2019 to 25% in 2020’s first quarter).
The Western Cape remains the coastal region of choice for both first-time and repeat buyer purchases, although in both categories purchases in KwaZulu-Natal grew by 4% in 2020’s first quarter over 2019, while purchases in the Western Cape fell by 3% in the first-time market and by 4% in the repeat-buyers’ market.
The Western Cape remains the most popular choice across all categories of property – affordable, mid-value, high value, luxury and super wealthy – but while transfers fell in each category in the Western Cape, KwaZulu-Natal recorded gains in 2020’s first quarter in all but the affordable category.