SIMON BROWN: I’m chatting now with Hayley Ivins Downes, head of digital at Lightstone Property. They put out some great property reports on a fairly regular basis. Hayley, I appreciate the time this morning. I suppose the first question to kick off with is will we be seeing increases in property prices, sort of overall residential property, during 2021?
HAYLEY IVINS DOWNES: Simon, thank you for this opportunity. Yes, we certainly have seen an increase. The average price of properties has increased by 14% from 2020 to 2021. That has definitely been seen in the numbers.
SIMON BROWN: My sense is that that’s a chunky increase. For residential property a double digit is real.
HAYLEY IVINS DOWNES: It is real. And when we kind of break down into the property types, the biggest portion is actually on the freehold, which is your standalone houses. That’s at 18%. Estates are at 9%, sectional title 5%. So it’s really interesting. People are looking at a bigger property, possibly working from home. Yeah, it’s really interesting.
SIMON BROWN: I suppose so. I live in a small flat and it was fine. And then the pandemic erupted and it was like, oh, I see. But the other thing that really struck me, we’ve got all this talk around zoom towns, people leaving Joburg and Cape Town and the like and, well, I wasn’t so sure. But the evidence is there. There were some of the Eastern Cape, the Free State who actually were leading the pack. There is certain evidence that people are saying, thanks, Joburg, it’s been real, but we are going to go live in, I don’t know, Rosendal or Cookhouse.
HAYLEY IVINS DOWNES: Yeah, definitely. We’ve actually seen a growth in transactions, specifically in the Eastern Cape and Western Cape. There’s definitely a move down to those areas, where people are actually able to work remotely. In actual fact in Western Cape growth and transactions we’ve had almost 15% – really higher than Gauteng. So the Eastern Cape and Western Cape have had more transactions in property than Gauteng. So it’s definitely the move.
SIMON BROWN: Price points – early in the pandemic we saw, I suppose, sort of mid–2020 a lot of activity in lower costs, sort of the affordable housing space, [with] interest rates at generational lows. Has that trend continued or we starting to see more activity up the cost curve?
HAYLEY IVINS DOWNES: Definitely up the cost curve, which is really interesting. So the band that is performing the most is your R700 000 to R1.5 million. We’re seeing the most transactions within that band, and specifically in quarter three, quarter four 2020 there was a 25% increase in that band in terms of properties being sold, and even more so between 2019 and 2021 we are looking at an increase in the R1.5 million to R3 million of 44%. So definitely in the upper echelons there are a lot more sales, but the R700 000 to R1.5 million [band] is definitely the band where the biggest amount of transactions have been happening.
In fact, what we are seeing is the market of R250 000 and lower has actually been the market that’s slumped during Covid and coming out of Covid. It’s actually been the line that’s dropped, out of all of them.
SIMON BROWN: Okay. That gets me thinking about some of the construction companies on the JSE.
A last question: first-time buyers. Anecdotally I’ve a number of friends who suddenly all became property owners during the pandemic, which had me scratching my head. But partly they wanted more space. Interest rates were low and there was opportunity. Are we still seeing a lot of activity from first–time buyers?
HAYLEY IVINS DOWNES: Yes, absolutely. Those numbers are back up to what they were in 2018. We are looking at kind of the back end of 2020, quarter three/quarter four of 2020, [which] was really high. We had about 64 000 transactions in a quarter – and compared to 2018, 61 000. Now we are looking at about 55 000. So definitely the numbers are back up there.
SIMON BROWN: If I put all this together, counterintuitively during the pandemic the property market has come out all right. In fact, we could make a case that is coming out looking quite good.
HAYLEY IVINS DOWNES: It’s absolutely the one sector that has really done well. We’ve seen numbers and transactions that have never been seen before. We’ve reached points that have never been reached before. That’s in the number of transactions, that’s in the value of sales happening. I think it’s really great for the property industry.
I think this next year is going to be interesting if there are interest–rate increases, because that’s always a factor that kind of changes some activity. I think at the moment it’s really rallying, it’s really good.
SIMON BROWN: And that is not something I would’ve expected, but there’s a lot about the pandemic that I did not expect, about which I’ve come out wiser.
Haley Ivins Downes, head of digital at Lightstone Property has been talking about residential property trends. I appreciate the early morning time.
You can listen to this morning’s full MoneywebNOW podcast here.