AA - May 2021

Author: Lightstone
9 May 2021

The gap is widening between coastal and inland prices in South Africa

Data analytics group Lightstone has published its latest data on South Africa’s property market, outlining the state of the country’s housing market and the cost of buying a home.

The data shows that annual house price inflation was recorded at 4.1% at the end of March 2021, a positive increase since the beginning of the year.

“The historically low-interest rates have had an overall positive impact on the property market from a performance perspective where we now see most of our provinces breaking above their five-year highs.

“Higher value bands, which are most sensitive to interest rate change, have also made a positive turnaround,” the group said.

While an increase has been seen at a national level, Lightstone’s data shows a growing gap between coastal and inland house prices.

“For some time the performance gap between coastal and inland properties was getting narrower but it is starting to widen again in response to the favourable interest rates,” it said.

Growing trend

Real estate agents from Lew Geffen Sotheby’s have said that a trend in coastal buying is likely due to increased semigration, with the realtor reporting significant growth in both sales and turnover in coastal areas in KZN, the Eastern Cape and the Western Cape.

Peter Maré, co-principal in Knysna and Sedgefield for the group, said that this trend has been boosted by the growing acceptance of working from home.

“Covid-19 has had a negative impact on so many aspects of our lives, but the one silver lining is that, with remote working now the new normal, many people now have the option of living in a place that makes them truly happy,” he said.

Maré added that most of the home sales are in the R2 million – R5 million band.

“Buyers are still generally value-driven with properties under R2 million being extremely sought after and strong activity up to about R5 million, although we have recently concluded a number of sales in the R10 million to R24 million range, but these buyers are very discerning and somewhat limited in number,” he said.

Agents at realtor Chas Everitt said that a notable semigration push was first seen in Q2 of 2020, and is likely to continue for the foreseeable future.

“We actually started getting more enquiries on our web listings during April 2020, just one month into the first lockdown,” said Jennifer Duncan, principal of Chas Everitt South Coast, which covers Hibberdene, Port Shepstone, Margate, Ramsgate, Southbroom and Uvongo.

“Once the provincial boundaries opened in June, we had a rush of people from other provinces coming down here to view properties.”

“To date, about 70% of those who have contacted us with a view to semigrating have actually made the trip to view and purchase homes – with the result that all well-priced properties have been selling readily since the middle of last year.”

Duncan said that there are a few reasons for this semigration trend, including the rising number of employees and business owners who are discovering that they can work remotely.

She said that more people are also opting to “retire” early from corporate jobs and start their own businesses, and more families becoming disillusioned with the cold winters and high cost of living in Gauteng.

“We find that most of those relocating from inland cities and buying on the lower South Coast are between the ages of 50 and 70, so there are not a lot of young families, although we do have excellent schools here.

“For most of our buyers, it’s more about a better quality of life, given the warmer weather, the sea and the beach, more outdoor activities and really great value for money. We often have people selling their homes elsewhere for R4 million, for example, and purchasing similar homes here for around R2.5 million.”

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