Page 17 - The Villager April 2021

Property

pressure experienced in house price Furthermore, the negative economic In the second graphic, sectional title
inflation across the luxury house growth has not yet filtered through to properties perform the least well in
segment might have been buoyantly house prices. terms of Scenarios 2 and 3 (between 3.1
affected by the lockdown as many high price inflation and 3.5% respectively), while the mid
of the homeowners and potential moves in sympathy segment – which is more dependent on
buyers in this property bracket had with inflation under gDP growth and so more susceptible to
the ability to work from home, placing this scenario, where growth or crashes – performs worst in
a premium on luxury properties with the economy recovers to pre CovID-19 Scenario 1 at just around 0.5%.
features which support a work-from- levels over the next couple of years In Scenario 1, it’s forecast that high
home environment. with little economic growth over the value properties peak at 2% and
long term. luxury properties at nearer 1% - but in
WHAT KIND OF A BOUNCE BACK In Scenario 3, new Scenarios 2 and 3, it’s anticipated that
WILL WE SEE? lockdown life increases both perform strongly, with luxury at
Following an out of the ordinary the demand for 6% in Scenario 3, and high value at 4.5%
year, it would be wise to view any residential housing, the freehold forecasts tend to track
economic forecast with some caution. particularly luxury housing and house inflation, while sectional title properties
the turnaround in luxury house price price inflation could rise to 5.2%. are influenced by other factors.
inflation – which usually leads the
housing market through upturns,
from -0.5% per annum to 2.5%,
could potentially be temporary as
the market catches up on pent-up
demand following the lockdown.
Initial results indicate that the number
of transactions are on their way to
returning to pre CovID-19 levels, but
the full effect of the recovery will only
be clear in the latter half of 2021 as
the impact of some of the bad news
is still to be felt. 600 000 people have
lost their jobs, new investments (gross “2020 has thrown some interesting has been interesting to see how a year
fixed capital formation) have reduced curve balls our way as unprecedented marred with such negative sentiments
significantly, and government debt is circumstances have kept us analysts can open new doors for the housing
expected to grow to 81% at the end on our toes. In saying this however, it market,” concludes de Kock.
of the fiscal year, which would require
major reform and more taxes as
suggested in the 2021 budget speech.
the lightstone forecast for 2021, in
the graphic above right, is based on
3 scenarios:
house price inflation
could drop to 2.1%
from its current
3%. this scenario
anticipates the number of transactions
decreasing as the pent-up demand
works its way out of the market.

The Villager • Issue 4 2021 • 15