3 trends reflecting the market right now
“Retirement estates are on the up, the average approved bond size has increased and ‘hiving’ is on the rise. Here’s why. . .”
1. Rise in demand for retirement estates
South Africa is one of the global pioneers in residential estate living. In fact, the only country with more residential estates than South Africa is the USA. Interestingly, residential estates are now becoming increasingly popular across the globe, especially in the UAE, Portugal, Spain, Mexico, New Zealand, Mauritius and the UK. In the last few years there has been a rise in demand for retirement estates especially.
AfrAsia Bank and New World Wealth recently released this year’s review of the top 10 residential estates in South Africa. Although retirement estates had its own sub-category, one retirment estate made it into the overall top 10.
Waterfall Hills Retirement Estate came in at nineth place – the only retirement estate in the top 10. It’s located in Waterfall City in Johannesburg, and house prices on the estate range from R3m to R6m. This estate has set the benchmark that others will look to follow.
2. Approved bond size has increased
The average approved bond size has increased by 4,5% in the past 12 months, while the average house price has increase by just 2,2%, according to the latest statistics from BetterBond.
Says CEO Shaun Rademeyer: “These figures correspond to a decline in the average percentage of purchase price being paid as a deposit in the year to end-August, from 22% to 20%, and the overall picture is one of increasing home affordability.”
This is mostly due to an improvement in disposable incomes, which the BankservAfrica Disposable Salary Index shows as having increased for the fifth consecutive month in July. “Wage increases, declining inflation and a small interest rate decrease have played a part in this growth, which means that many prospective homebuyers have more of their take-home pay available to put towards a monthly bond repayment.
“This is good news for the real estate industry, because it makes the banks more likely to approve home loan applications – and to lend a bigger proportion of the home purchase price. Together with the drastic slowdown in house price growth over the past 12 months from 9,9% to just 2,2%, this opens the door to more successful home sales.”
However, Rademeyer says, neither buyers nor agents should take this to mean that the banks are likely to relax their strict credit qualification criteria any time soon. “The economy is in a fragile state and there is a higher risk that borrowers could suddenly become unemployed, so caution prevails.”
3. Hiving on the rise again
For both economic and security reasons, households made up of several generations of the same family are on the rise again in South Africa, and estate agents are reporting a marked rise in multi-generation home purchases, with parents and children or parents and grandparents pooling resources to buy a residential property that will accommodate them all.
Says Berry Everitt, CEO of the Chas Everitt International property group: “There has recently also been a rise in demand for homes with multiple granny flats or separate cottages to accommodate retired parents, newlyweds or working singles in the same family.
“At the same time, many retirees who already own large properties are now building themselves a retirement cottage on the same stand while one or more of their adult children move into the original family home.”
Everitt says the main drivers of this trend are declining affordability in the current economic climate, especially for the young and the elderly, as well as concerns over crime and personal security.
“But multi-generational housing also delivers many social benefits for the families concerned. For example, retired parents who live on the same property as their children might do it primarily to stay close to their grandchildren – but at the same time may also be relieving the pressure on scarce state housing for the aged.
“In any case, we expect hiving to continue gain ground in SA, and to see specific home designs begin to emerge to meet the demand.”
By Property Professional