Growth in residential property prices slowed further in 2020, with year-on-year increases of between 2.2% and 2.6% in October. This comes against the backdrop of weak demand pressures. 

“The muted growth in residential property prices continued to be a reflection of the protracted period of weak economic growth, high unemployment and constrained growth in household disposable income, which were exacerbated by the effects of the Covid-19 pandemic,” the Quarterly Bulletin said. 

The economy suffered a monstrous contraction of almost 52% in the second quarter (Q2) on an annualised basis, followed by a rebound of 66.1% in Q3. Still, the report noted that: “Despite the strong rebound in the third quarter, real GDP was only at a level similar to that in the first quarter of 2013.” 

That is a massive setback and with the unemployment rate over 30% – or north of 40% using a wider and more accurate definition – it is no surprise that property price growth would stagnate. But green shoots are appearing. 

“Encouragingly, the average time that residential properties remained on the market declined from 14.1 weeks in the second quarter of 2020 to 10.6 weeks in the third quarter – the lowest since the third quarter of 2007,” the Quarterly Bulletin said. 

“This was largely attributable to the historically low interest rate environment and lower transfer duties, which improved affordability and boosted the demand for lower- to mid-priced properties, as well as a change in housing needs due to the pandemic.”  

This is an interesting trend. The SARB responded to the economic mayhem triggered by the pandemic by slashing its key repo rate by 300 basis points in 2020, bringing it to 3.5% and the prime commercial rate to 7%. Combined with lower transfer fees, that seems to be paying social dividends by making housing more affordable to lower- and middle-range income groups. And property is a source of wealth, so this could – tentatively – point to a blunting of the wealth and ownership disparities which still disfigure this society. 

Housing needs are also changing, the report noted. The pandemic has made working from home commonplace for mostly white-collar workers who can do their jobs with a proper internet connection. This might be raising the appeal of properties that are a long commute from the hubs of economic activity. 

Anecdotally, there seem to be a lot of “FOR SALE” and “SOLD” signs springing up in major centres. The recovery needs all of the help it can get and the real estate sector appears to be playing a role. BM