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Will shift to coastal living accelerate as Covid19 changes the way we work?

Trading Places 

Covid19 could reshape South Africa’s work landscape – and with it where many people choose to live.

While the full impact of the pandemic is yet to be felt, it is creating opportunities throughout the residential property market – and high up on the list is coastal property.

As South Africa moves to Lockdown Level 1, more and more families are looking to swap the hustle of big city living for the coast, where nature, family and lifestyle come first.

Estate agents are reporting better than expected interest in popular coastal areas such as northern KZN and the southern Cape coast – and this mirrors a trend in other countries, where those who no longer need to be in the cities are opting for safer, more relaxing lifestyles in smaller towns or villages.

Those who are relocating are creating opportunities in the cities for existing homeowners to buy-up and first-time homeowners to enter the market.

So, while changing work demands are encouraging a new look at coastal markets, all buyers are taking advantage of reduced interest rates – at a 50 year low – and the price correction which has been underway for some time in the residential market.

Real estate agencies only opened on June 1, and sales activity was surprisingly brisk once the “For Sale” signs went up around the country.

FNB said recently buyer interest on property portals and the volume of new mortgage applications had surpassed pre-lockdown levels.

Our focus is, however, on the coastal market, where transfers (graph below) in the first quarter of 2020 were slightly down on the comparable period in 2019.

There is no further data available given that the deeds office was closed for some time, but it is widely anticipated the trend will swing the other way when the Q3 data is released and the impact of the reported activity feeds through the system.

Interestingly, total transfers were up in Q1, and the expectation is that Q3 will demonstrate the market’s resilience and show an increase on transfers registered compared to Q3 last year.

The dominant buyers in coastal markets are the 24-40 age group, marginally ahead of the 41-49 age group, but both are some way behind the 50-64 age group.

The realignment of the work landscape and current sales activity suggests professionals are looking to move in greater numbers and this could help push grandparents still in the cities to move earlier than they may have planned.

Professionals in their 40s and retirees are upsizing their coastal properties quicker than other categories. The biggest single jump at 16% came from the 50-64 age group, up from just 3% in 2019.

At the other end of the market, lifestyle choices are pushing the more debt-conscious Millennials and Gen X buyers (24-40 age group) to downsize their homes (graph below) in increasing numbers (from 8% in Q1 in 2019 to 25% in Q1 2020).

Downsizing continues in older categories, principally due to children leaving home and financial considerations – and this is a trend that is likely to increase as the economic effects of Covid19 continue for some time.

The Western Cape remains the coastal region of choice for both first-time and repeat buyer purchases, although in both categories purchases in KZN grew by 4% in Q1 of 2020 over 2019, while purchases in the Western Cape fell by 3% in the first-time market and by 4% in the repeat-buyers’ market.

The Western Cape remains the most popular choice across all categories of property – affordable, mid-value, high value, luxury and super wealthy – but while transfers fell in each category in the Western Cape, KZN recorded gains in Q1 of 2020 in all but the affordable category.

Article provided by LightStone Property