Category From the Desk of the MD
As a consequence of Covid-19, the real estate market has become more global, with many countries now experiencing a similar shortage of homes for sale following a surge in demand due to low interest rates and a drop in the rate of supply by builders and developers.
In response to this, home prices are also rising rapidly in many other parts of the world as they are in SA, along with inflation, and housing affordability is once more being curtailed.
In SA, this situation will most likely be uniquely exacerbated in the coming year by a very high unemployment rate, but in many other respects we expect the local market to continue to track some new global trends that are emerging post-Covid. These include:
- The mass re-purposing of commercial property assets, including office blocks and shopping centres, to residential and mixed-use assets. In addition, we are already seeing developers rethink the design and pricing on several city-centre apartment developments to provide smaller units at more affordable prices in amenity-rich buildings. This trend will be particularly relevant in SA where youth urbanization is still occurring at a massive rate and there is a huge need for decent rental accommodation in the cities for young working people. Investors in these developments will be both corporates and individuals.
- The revitalization of older suburbs and commercial centres to support the local shopping, working, medical and entertainment needs of residents who increasingly do not want to travel far from their homes, and to provide more reliable infrastructure as well as better access to public transport for those who do still need to commute. There will be excellent opportunities for imaginative developers to be involved in such projects, and to create a greater diversity of property types in certain popular areas.
- A surge in upgrade purchasing as many of the first-time buyers of the past two years become the repeat buyers of 2022 and 2023. The percentage of first-time buyers in the market will decline as central banks start to raise rates again to curb inflation, and those who already have equity in a home that they can use as a deposit will slowly go back to being the majority of buyers. Declining affordability is a strong reason for current buyers to commit to a purchase as soon as possible.
- The rapid uptake of more Smart home technologies, not only for home security but also for the management of solar power systems, water usage, cleaning and maintenance tasks, lighting, entertainment and even food monitoring and ordering.
- Increasing use of digital currencies such as Bitcoin in real estate transactions, including home purchases and even rental payments as ownership of these currencies becomes more widespread.
- An increase in demand for home staging and home video-tour services as online listing and marketing increasingly becomes the norm - and the competition for buyer attention heats up.
- An increase in the use of property technologies and digital services to create more administrative efficiencies and enable property professionals to focus more closely on their clients and the 'people' aspects of real estate.
- A huge increase in the use of "green" building methods and technologies in new projects - and the widespread retrofitting of systems to make existing homes and other buildings more energy efficient, more sustainable and more independent of municipal or national power, water and data networks.
However, I do hope that at the end of this tumultuous year, all our valued clients, suppliers, business partners, agents and staff will be able to enjoy some well-deserved "time out" with their families and friends. From RealNet, we would like to say a very big thank you to you all, and to wish you a safe, peaceful and happy festive season.
