Demand for homes priced at less than R2m is expected to remain very lively in 2021 as long as interest rates remain at current levels. This demand will be supported by large numbers of first-time buyers as well as repeat buyers downscaling from more expensive properties. The actual number of transactions in this bracket start to slow down as the banks begin to lend more cautiously in the face of growing concerns about employment stability. In fact, we are already seeing bond approval numbers drop from the highs of July and August 2020, and fewer grants for 100% home loans. The possibility of large-scale retrenchments this year in big private sector companies and the public sector is especially worrying.
Price growth and possibly even real (after inflation) price growth in the under-R2m market this year due to steadily tightening inventory constraints, especially at the lower end of this sector. With debt relief measures having come to an end, minimal salary increases expected and the cost of everything from schooling and medical aid to electricity, water and transport set to rise as usual. In addition, some R5bn worth of income tax increases are expected to be announced. Large number of quality tenants have become home buyers in 2020 due to the lower interest rates, and on top of that landlords have had to contend with extensive non-payment issues due to the economic effects of Covid19 pandemic and lockdown, so they are already very cautious when it come to new tenants.