Factors supporting investment in the current property market include a competitive mortgage market and the lower interest rate cycle of the Reserve Bank of South Africa.
Since the last property boom (2003-2005), South Africa's housing market has shown continued resilience, despite the challenges of a halting economy.
Reductions in the repo rates has spurred on first time home buyers to enter the market which seems to be propelling property values in the lower to mid markets (R1.8 million and below), with most of the activity happening in apartments under R1.5 million. The ever-growing need for housing has created a favourable market condition for investors who are looking to buy and rent property in this price range.
As South Africa's higher education institutions have tremendously limited campus capacity, apartments in student areas also continue to be in high demand.
Developers are boosting supply to meet the current growing demand and so the market for apartments continues to outperform house prices. Low interest rates mean that buyers can afford 30% more than they did in January. With the onset of the pandemic more buyers prove to value apartments that offer safety and communal outdoor areas.
A number of factors are expected to continue to underpin current activity in the housing market. These include interest rates which are likely to remain at near-record lows this year, an ongoing large number of potential first-time buyers eager to gain a foothold on the property ladder, and financial institutions with a continued appetite to extend mortgages to home buyers.
The Western Cape's residential real estate market is not a homogeneous entity. Instead, it consists of many different suburbs and neighbourhoods - each with its own nuanced factors determining desirability and affordability. As an investor, we highly recommend that you partner with one of our Grove Properties Property Professionals who can give you specific advice on the property market in your specific area.