35% increase in the luxury property market since 2019, will this continue to rise?
Category News
While the local property market index continues to show less than stellar results for the luxury housing category, a recent peak of interest by foreign investors spurs hope for home sellers. With a clear interest from this sector, some of the country's most prestigious properties are being sold at enormous value.
The advent of foreign interest
The luxury homes category usually includes property that is sold from R3 Million and upwards. Real estate agencies are now confirming an increased demand for homes in this bracket mainly from areas such as the Northern Suburbs in Johannesburg, the Southern Suburbs of Cape Town, and parts of Kwa-Zulu Natal such as Umhlanga and Ballito.
Although luxury homeowners are struggling to sell locally, an uptick of foreign investment has increased up to almost 36% from 2019 with almost a third of the market share inclusively snapped up by extrinsic buyers that are fast showing interest in the country.
Examples of this include a sale of an R45 million Cape Town penthouse to a buyer from Germany, an exclusive R36 million property in Fresnaye to buyers from the United Arab Emirates, as well two R20 million Constantia estates to buyers from Zimbabwe and Malawi.
Despite offhand anecdotes, financial data from Property24 concludes that the biggest winners are sellers who are looking at around the R5 million to R10 million price range. As such, they are outperforming their more higher-end counterparts by double-digit margins.
The recent protest action in South Africa will likely have an effect on the overall statistics. But with little data to create an accurate image, it's impossible to tell how much of an effect that will be. We will continue to monitor those statistics and publish amending data to align with financial readings
National homebuyers are also discovering the value
The fact of the matter is that the current housing market is still driven by low interest rates with the highest volume of sales remaining under the R3 million mark. However, first-time homebuyers and investors seeking to relocate for a better quality of life are quickly taking advantage of the high-end dip.
Coupled with a historically low-interest rate and people seeking to upgrade, local buyers are capitalising on high-end properties and buying them at prices that are almost 30% less than they were in 2017.
How has working from home affected the property market?
There's no denying that having half of the country's workforce change how they operate has far-reaching consequences. Around 34% of employees are now exclusively working from home with a further 22% working between home and office spaces.
Such a shift has heavily impacted how people are managing both their personal and professional lifestyles. Because of this, people are quickly learning the importance of home office spaces with interest jumping from 12% to 21% after the advent of lockdown measures. With that in mind. The idea that people are seeing larger spaces with increased interest makes perfect sense.
With work from home being an increasingly favoured option. People are moving away from the traditional concept of staying close to their place of work and are quickly leaving city spaces to find a better quality of life in suburban and rural areas. With growing technology and sudden cultural shifts, It's easier than ever before to run a successful business remotely with no more than a basic internet connection.
Shifting paradigms
What we are seeing is an amalgamation of transpiring events that are keeping interest rates low enough to inspire foreign and local investments at varying levels of the property market. Broader participation in the marketplace coupled with a professional lifestyle change en masse has inexplicably granted people a new type of freedom.
Not only can they choose their home environments free from factors such as work proximity, but also a new desire to expand upon their home spaces to make room for a professional lifestyle.
Read our previous article here: https://www.hamiltons.co.za/news/the-festival-of-motoring-the-unforgettable-showcase-of-automotive-prowess-postponed/
Contact Hamiltons Property Portfolio for all your buying or selling requirements:
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Author: Lisa