2022 - WHAT DOES IT BRING?

Myles Wakefield, CEO of Wakefields Real Estate, admits it is not straightforward to assess what the property market has in store for us: "There are a couple of predictable elements, but with the pandemic, politics and more, many local and global incidents and accidents can impact on our all-important property market." All-important of course, because it not only plays a significant role in the SA economy - clearly one of SA's most resilient sectors - but also holds up a mirror to the real state of the country. Sentiment is, as always, a significant driver of a buoyant or sluggish market, and reflects how we are feeling about the future.

Wakefield says, "Coming off the back of a buoyant 12 months - from hard lockdown to July 2021 - it was no surprise that that pent-up pressure on the property market would ease, and the market reach a more realistic level. I believe that trend will continue and be the hallmark of property through 2022."

FNB's Property Barometer suggests, "Market strength indicators show that growth in demand has moderated, but market volumes are still running above pre-pandemic levels." Little doubt that the legendary low interest rate was a major player in fuelling the property market, and its likely incremental increase will slow that impetus. FNB believes that, "Interest rates are set to increase by at least 75bps this year, on the back of rising inflationary pressures and the less accommodative global monetary policy conditions."

ooba CEO Rhys Dyer expects interest rate increases of between 0.75% and 1%: "Given that each 0.25% increase represents an approximately R150 per month additional repayment on an R1m loan over 20 years, I expect interest rate hikes to impact property affordability, which will have some impact on demand and in-turn property price growth." Dyer notes however that: "Even at a prime lending rate of 8%, we are still well below the level of 10% that existed when we entered into the pandemic in early 2020."

For Wakefield, "The low interest rate saw first-time home ownership as the strongest sector during the past few years, but with the rate increasing, albeit slightly, there's signs of a shift."

Dyer, too, predicts a shift in buying activity from the lower end of the market to the mid segment, "as demand for home loans at the lower end of the market contracts due to affordability constraints." He also touched on a potential change in the rental market, where the all-time-low interest rate has made buying as affordable as renting: "The rent or buy calculation is expected to start shifting back towards renting from an affordability perspective, which may result in more buy-to-let investment buyers entering the market."

But Dyer envisages on-going high approval rates for home loans during 2022, with banks continuing to compete for new business by offering low or no-deposit lending requirements.

Wakefield stresses that, although the market is somewhat quieter than it was, 2021 was a good year, and 2022 will only show a moderate shift: "The pandemic may not have impacted on the property market in nearly the same way as it has for other businesses, but it's certainly damaged the economy. With Omicron seemingly the weakest of the variants, we all have strong hope that this may be the tail-end, and our ailing economy could begin opening up. That would be good news for property and every other industry."

There have been some interesting trends emerging during and post-pandemic, most rooted in the 'work from home' scenario. Good Wi-Fi, and work could be on a desert island. It has been possible to escape the rat race and head for that little Midlands country town or live the dream on an eco- or wildlife estate. Many have shed the city stresses and headed to little, unheard-of towns - previously considered retirement or holiday destinations - where the air is clean, traffic non-existent, the waves are good, no commute, leisure is real, and the local GPs and vets do house calls. New possibilities have emerged, better lifestyles are the driver, and of course, small town, smaller price, better value.

For those who want the urban or suburban life, many have sought out bigger properties to accommodate the in-house office/study/schoolroom. Larger gardens too, give the family space to breathe outdoors - something the pandemic encouraged.

Granny flats have always been desirable items on a property buyer's wish list, but as economic conditions tighten, no more so than today. Whether it is for grandparents whose finances have shrunk/need the security of more people on a property/need care/assist with caring for younger children...or as an office/space to rent out, they are increasingly worth their weight in gold.

John Loos, property strategist for FNB, looked at Stats SA's November release of Residential Buildings stats, and commented: "We expect the level of residential building activity to peak during 2022, and possibly even show some decline later in the year. The reasoning is, firstly, that the upward normalisation in building activity off a low 2020 base, created by hard lockdowns disrupting market and building activity, is more-or-less complete. And secondly, and most importantly, the new residential development market is sensitive to interest rates, and interest rates started to rise in November 2021."