Earlier this year, as Covid-19 burrowed its way into SA, most property economists predicted that house prices would crash this year.

THE MYSTERY OF SA’S HOUSE PRICE BOUNCE

Earlier this year, as Covid-19 burrowed its way into SA, most property economists predicted that house prices would crash this year. Home buying activity was, after all, already in the doldrums. It turns out they couldn’t have been further off the mark.

Data released this week by more than one industry expert underscores how the residential property market has in recent months bucked the downward spiral seen in most other sectors of the economy.

Standard Bank, which has a 33% share of SA’s home loan market, has recorded a steep 23% rise in mortgage applications year to date (from January to September, year-on-year). And the bank’s house price index has seen a robust 6.4% increase in medium-sized house prices in August.

Needless to say, that stands in stark contrast to the earlier predictions that SA house prices could fall by 10% to 20% this year.

Steven Barker, Standard Bank’s head of lending products, believes that the better-than-expected price growth has been driven by a surge in demand for houses priced between R1m-1.7m, which has become somewhat of a sweet spot for banks.

Barker says it’s a segment supported by first-time buyers for whom owning a house has now become more affordable than renting, thanks to the three percentage point drops in interest rates this year. In addition, he says, the trend of working from home has prompted a lifestyle changes which has forced people to rethink what ‘home’ is — supporting the demand. Read more

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