SA's housing market is booming – especially in Cape Town – despite rising interest rates

Business Insider SA
(Getty Images)
(Getty Images)
  • The South African housing market experienced "unprecedented" levels of activity in the second quarter of 2022, according to the latest RE/MAX National Housing Report.
  • This, despite fears of an economic recession and rising interest rates.
  • Bond registrations recorded nationally were up 30% compared to the same period last year and almost 45% compared to the previous quarter.
  • The number of sectional title units sold countrywide grew by 50%.
  • Suburbs in and around Cape Town proved to be the most popular, leaving no room for Gauteng, which usually features in RE/MAX's most-searched list.
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The South African housing market has "performed surprisingly well" amid global fears of an economic recession and rising interest rates, according to real estate firm RE/MAX.

South Africa's housing market boomed during the Covid-19 pandemic, thanks, in the main, to record-low interest rates. More than 267,000 residential properties were sold in 2021, according to Lightstone Property data, with the total value of transactions nearing R280 billion, up around 30% from pre-pandemic levels in 2019.

First-time buyers, buoyed by low-interest rates, drove the pandemic-era boom, while later purchases of larger and more expensive homes sustained activity towards the end of 2021.

But the period of consistently low-interest rates came to an end in November 2021, seeing a downturn in the housing market's activity in the final quarter of the year. Since then, the interest rate has been climbing steadily, with inflationary pressures reaching new highs.

Although the housing market's start to the year was subdued, activity recorded during the second quarter of 2022 has been described as "unprecedented" in the latest RE/MAX National Housing Report.

Close to 53,000 bond registrations were recorded at the Deeds Office over the period April to June 2022, according to the RE/MAX report citing Lightstone data, up 30% compared to the same period last year and an increase of almost 45% compared to the previous quarter.

The number of transfers, both bonded and unbonded, in the second quarter amounted to 77,880 compared to 52,241 in the previous quarter, indicating a quarter-on-quarter rise of almost 50% and a year-on-year increase of 32%. The number of sectional title units sold countrywide grew by 50%.

"In the first quarter of the year, we already noticed activity subside following the first interest rate hike announced in November 2021," explained Adrian Goslett, the regional director and CEO of RE/MAX Southern Africa, in a statement on the National Housing Report on Monday.

"However, somewhat inexplicably, the housing market bounced back and is now even stronger than it was last year – and last year was already a record-breaking year for our network. In fact, barring one month, our network's reported sales totals are higher for every month this year when compared against last year's figures."

Although encouraged by this growth in the second quarter, Goslett noted that further interest rate hikes "will have a more noticeable effect" on the housing market's activity going forward.

This increased market activity does not equal strength for average house prices. National year-on-year house price inflation was at just 4.46% in the second quarter, according to the RE/MAX report, and has decreased consistently over the past year.

Despite slow growth in average house prices, properties in the Western Cape are still the most expensive. The median asking price, of active listed stock on Private Property during the second quarter, in the province, remained stable at R2.5 million.

Properties in the Western Cape continue to draw high levels of interest and, for the first time, fill the National Housing Report's top-five searched suburbs list. Previously, while suburbs in and around Cape Town were prevalent in this list, Fourways, Faerie Glen, and Glenvista – all in Gauteng – were also suburbs of particular interest.

In the second quarter of 2022, Bloubergstrand topped the list of most-searched suburbs nationally, with 3,159 searches, followed by nearby Sunningdale, with 2,410 searches. Parklands came in a close third with 2,315 searches, followed by Claremont with 2,199 searches.

"My guess as to why we continue to see such high levels of activity is probably owing to the change in lifestyle that the pandemic put into motion," said Goslett, highlighting the Western Cape as a consistently popular destination for semigration, which surged during the pandemic-induced lockdown.

"Whether you are now working from home and require an office, have realised the value of living closer to loved ones, needed to downscale owing to financial constraints, or simply discovered that you no longer like your current home, the pandemic provided many with reasons to buy and sell property."

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