The South African property market has shown a remarkable recovery following the Deeds Office closure during the second quarter of 2020, reflecting the same levels of activity pre-pandemic.
According to Lightstone Property data, a total of 44 885 bond registrations were recorded at the Deeds Office between October and December 2020. The RE/MAX National Housing Reports reveal that this figure is less than eighty registrations shy from the number of bonds that were registered in 2019’s fourth quarter and this is a considerable correction on the mere 5 792 bond registrations that occurred during the hard lockdown during 2020’s second quarter.
Beyond this, the number of transfers (bonded and unbonded) recorded at the Deeds Office between October to December 2020 amounted to 61 749*, just 2% lower than the number of transfers recorded during 2019’s fourth quarter. This is a massive improvement on the second quarter’s dismal 3 869 transfers. Compared to 2020’s third quarter, the figure grew by 28%.
Sectional titles versus freehold properties
Of the 61 749 transfers, a total of 30 167* freehold properties and 16 288* sectional title units were sold countrywide (these figures exclude estates, farms, and land only transfers). The number of freehold properties registered decreased by a mere 1% year-on-year, increasing by 22%, quarter-on-quarter and showing a near full recovery from the 3 869 that were recorded in the second quarter of 2020. Sectional titles showed an even faster recovery from the 1 105 registered sales in the second quarter of 2020. The figure increased by 2% year-on-year and 28% quarter-on-quarter.
Slowed house price recovery
According to Lightstone, the fourth quarter’s national median price of sectional titles is R991 006 and the national median price for freehold homes is R1 187 964.
The RE/MAX National Housing Report reveals that, for the fourth consecutive quarter, the prices of sectional titles*, have dropped year-on-year. While the fourth quarter is still slowly recovering from the R953 084 that was reported in the second quarter of 2020, it has shown an increase of 2% when compared to the third quarter and these figures reflect a 3% drop when compared to 2019’s fourth quarter.
Lightstone reveals that the average bond amount granted during this period amounted to R1 203 000. The RE/MAX National Housing Reports reflect that this is an increase of 8% since the last quarter and of 8% since 2019’s fourth quarter.
Shifts in market segment performance
Historically, sales below R400 000 accounted for the largest portion of all transfers. However, this quarter reflected an interesting change; sales priced between R800 000 and R1.5 million now account for the largest portion at 28%* of all transfers occurring during the fourth quarter of 2020.
Coming in behind this figure were transactions between R400 000 – R800 000 which make up 24.5%* of the total transfers. This is followed by sales priced below R400 000 which now account for just 22.9%* of all transfers in the fourth quarter.
Sales between R1,5 million to R3 million accounted for 19%* and those priced above R3 million account for 5.6%* of the total transfers this quarter.
When reviewing each market segment in isolation, the number of transfers between R1,5 million to R3 million has grown the most by 33% on the figures from 2019’s fourth quarter. This is followed by the number of transfers that occurred above the R3 million price point, growing by 15% year-on-year; transfers between R800,000 – R1,5 million grew by 14% year-on-year.
Showing a decrease in the number of transfers when compared to 2019’s fourth quarter, sales below R400,000 dropped by 31% year-on-year and those between R400,000-R800,000 shrunk by 7% year-on-year.
“In general, the increase in sales after lockdown in the metropolitan areas largely occurred within the middle- to lower-income markets: areas where people who rented before could now afford to buy. This in part explains why the R800,000 – R1,5 million market made up the largest proportion of transfers. Across the country there has also been an upsurge in the number of enquiries made by those who are searching to relocate to the coast now that they are able to work remotely, which could possibly explain why there was an increase in the number of transfers that occurred over the R1.5 million price point,” explains Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
Market performance per province
The top five searched suburbs nationally on remax.co.za during 2020’s fourth quarter were Musgrave, KwaZulu-Natal, with 2893 searches; Morningside, Gauteng, with 2701 searches; Essenwood, KwaZulu-Natal, with 2383 searches; Parklands, Western Cape, with 2088 searches; and lastly Brackenhurst, Gauteng, with 1931 searches.
According to Private Property data, the median asking price for the North West saw the highest quarter-on-quarter and year-on-year growth and amounted to R1.4 million. The only province to reflect a decline was Gauteng at a median asking price of R1,372,689. Despite remaining without growth quarter-on-quarter and year-on-year, the Western Cape’s median asking price remains the highest at R2,499,000.
“Despite the renewed activity and unprecedented recovery, the South African property market has enjoyed in 2020, I predict that house price appreciation will remain low for 2021 because of the financial pressure many households will feel owing to ongoing economic challenges brought about by the pandemic. The 2021 market presents as many opportunities as it does challenges. Those who can afford to invest in real estate now will stand to make substantial long-term returns on their investment,” Goslett concludes.
