The market for buy-to-let property is on the rise.

As the national pricing index shows, the housing inflation rate is starting to ease. As of the close of Q3 of 2022, the inflation rate slowed to 2.99% from an average rate of 6% in the subsequent months. 

This is encouraging news for investors as a lower turning point may be fast approaching for 2023. All of this starkly contrasts to rising interest rates, pressures on pricing, and a slump in economic growth. Regardless of the pressures, one thing is certain - Property remains a resilient and stable investment solution.

A brief rundown of the stats 

From the most recent data points captured by Ooba, mortgage approval has been steady at a comfortable 84.1% in Q3 22. The approval rate came close to this number during the close of 2021 when inflation was at an all-time low.

As such, the buyer's market can take full advantage of favourable lending conditions, especially within the field of buy-to-let property. This rebound can be attributed to the rising demand for rental property. 

The impact of semigration, upsizing and regional differences

Movement between different regions in the country, also known as semigration, surged in Q3 of 2022. 14% of all home sellers expressed the desire to move to another region as their stated reason.

On the other end of the spectrum, homeowners selling to upsize their living space or move into a larger property was also surprisingly high at 13% of all sales recorded in Q3. Again, despite external economic turmoil.

Perhaps the most significant recorded growth is seen in coastal property. This may also tie into semigration trends as the Western Cape homeowner confidence level continues to outpace the rest of South Africa.
With an 8.6% increase in coastal property and an easing of 4.2% in inland property, the price premium for mainly Western Cape-based homes widened by a difference of 4.4%. This is the highest it's been since mid-2005.

Other coastal areas of interest

Outside of the Western Cape, areas such as Nelson Mandela Bay and Ethekwini in KZN (which encompasses Durban North and South) rose remarkably. NMB, in particular, had an impressive showing. As of mid-2022, the average housing price rose by 9.7%, with Ethekwini prices escalating by a stable 9%.

These figures more than double the rate of growth seen in the other Coastal metros such as Cape Town and George, which ordinarily enjoy an average price increase year on year.

The major takeaway from these stats is that coastal property remains a lucrative investment opportunity. Coupled with increased demand for rental property, one may wish to stick to the tried and true investment return of coastal real estate.

Our doors are always open! Visit our website https://www.homesofdistinction.co.za/agents/ or pop by our offices for a chat. Our friendly property practitioners are always available to assist in any regard.
 

Homes of Distinction CC holds a Fidelity Fund Certificate issued by the Property Practitioners Regulatory Authority.