Property, a pandemic and reasons to be positive
Category Blog
A mere year ago terms like "lockdown", "coronavirus", "social distancing" and the now-cringeworthy "new normal" were foreign concepts, certainly not part of our everyday discourse. But that was pre-pandemic, before Zoom calls became the new sitting in traffic (in terms of time spent doing it)!
On a far brighter note, it has been an interesting year for the property market - almost unexpectedly so. After much concern and panic when the first hard lockdown curtailed economic activity, the lowering of the interest rate and the relaxing of the lockdown measures meant the property sector bounced back quickly, befitting for an industry known for its resilience.
Sustainability of mid-year surge
By as early as June 2020 we were seeing almost unprecedented levels of property purchases by first-time buyers. While everyone is keen for this flourish to continue, certainly when one considers the property sector's contribution to overall GDP, it will depend on how the macro economy performs in the coming months. Some economists have suggested that the real economic impact of the pandemic and the first hard lockdown will only really be felt in the first and second quarter of this year. Whichever way this goes, it will affect the property market.
Having said that, while the interest rate remains low, which it likely will be for some months still, we can expect to see continued activity in the first-time buyer segment. Whether it will be at the same rate as between June and December 2020 remains to be seen.
More room for your Rand
Historically, decisions around where to purchase property were greatly influenced by its proximity to one's place of work. With remote work now the norm across industries, the importance of being close to the office has diminished, offering buyers far more freedom to move to areas that otherwise might have been less appealing. Typically this means moving out of city centres to areas that offer more value for money.
We are also noticing a small but mentionable preference for properties that have the space to accomodate a home office. This speaks to the way we're embracing remote work and making space in your lives for this.
Rise of the secondary city
The rapid adoption of remote work has not only altered what we need from our homes, but is paving the way for semi-migration to cities other than the traditional metropolises.
We're only starting to wake up to the potential of secondary cities, both in terms of quality of life for those who choose to make the move from the more established urban centres, but also as a means of driving economic growth in these areas.
One hopes this trend provides the necessary impetus for authorities to ensure the infrastructure keeps pace with the needs of a burgeoning urban community in terms of services such as roads, telecommunication networks, healthcare, education and the like.
It's early days still but at Leapfrog we are seeing a slight increase in demand for properties in particularly Polokwane and Bloemfontein. In the coming months it will become clear whether this is in fact an "infectious" trend, and what the real effect of the property market will be - both in the market these buyers are leaving and the ones they are entering.
Future forward
The Reserve Bank has intimated that the interest rate is likely to remain low for a while still, and has made good on the promise with the rate remaining unchanged after the first Monetary Policy Committee meeting on the year in January.
Property remains a stable, resilient investment and one worth taking advantage of in 2021 - be it as a first-time or as part of a growing portfolio.
Author: Bruce Swain
