Page 6 - March 2021

FROM THE CHAIRMAN
KEY MARKET

FACTORS

" Property market driven by key factors - pandemic and interest rate."

We end the month with the good news that the first vaccines have arrived in the country for healthcare workers and look forward to
the implementation of a countrywide vaccination programme in pursuit of halting the Covid Pandemic.

Until the pandemic is under control, the economy and property market will remain overshadowed by the economic effects of the
pandemic and lockdowns. This was reflected in what is widely believed to have been a rather sombre State of the Nation address by
President Ramaphosa. Similarly, budget 2021 further reflects the current economic challenges.

The upside for real estate though is that despite the economic challenges, the unbelievably low interest rate of 7% will likely remain
until the latter part of this year. Buyers continue taking full advantage of the favourable conditions which means that there are plenty
of opportunities for sellers.

According to mortgage originator, ooba, home loan applications increased year-on-year by 36% for the fourth quarter of last year
while value growth was up by 56%. This is a strong indication that buyers are making use of the interest rate not just to get into their
first home, but to buy more expensive property. This would include sellers taking the opportunity to sell and in turn buy up.
Competitive pricing remains important for sellers. According to ooba’s data, the bank lending climate remains favourable with high
loan-to-value (LTV) rates compared to prior years. This means that aside from first time buyers, qualifying tenants are also able to
continue taking the opportunity to buy while the interest rate is low.

In contrast to the initial expectation, the FNB HPI showed that house prices remained resilient in the second half of 2020, rising by
3.8% y/y in December from 3.5% y/y in November. The price growth has been more prominent in the more affordable price bands
between R500 000 and R1.5 million with a higher degree of resistance in the higher price bands. As expected, selling due to financial
pressure is increasing but we are not yet seeing the level of distressed properties which followed the 2008 Global Financial Crisis.

The rental market has been particularly busy since the start of the year for a variety of reasons. Many of our branches are reporting
that landlords have been accommodating towards tenant needs in view of the pandemic-related financial pressure. Many landlords
have either kept their rental rates unchanged or reduced their rental prices to ensure they can keep their properties occupied.

Generally, the sales and rental market is holding up well given the current economic constraints with plenty of activity. In a
challenging market, it is always recommended that you work with a credible real estate brand that has experienced the market
fluctuations and is best placed to provide you with the right advice and guidance regardless of your property needs.

Samuel Seeff
Chairman, Seeff Property Group

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