Bond applications for new developments are on the up
New residential developments (also known as off-plan properties) have experienced a notable surge in popularity among South African homebuyers, and this trend is set to accelerate for the foreseeable future.
Data from ooba Home Loans, South Africa’s leading home loan comparison service, shows an increase in approved home loans for new developments – up from 6.89% in October 2021 to 14.99% in September 2022 – a 117% increase year-on-year.
“The key factors driving the demand for lock-up-and-go properties such as these are linked to stock shortages of affordable free-hold homes in sought-after areas and the reduced costs of buying into a new development due to zero transfer duties, plus the benefits housing developments can offer buyers,” comments Rhys Dyer, ooba Group CEO.
“Homebuyers are also attracted to the convenience and luxury of on-site amenities such as gyms, swimming pools, restaurants and kiosks, the enhanced safety and security, as well as the prospect of being surrounded by a community.”
New Development Breakdown Per Region
2022 proved to be a busy year for property developers within the ooba Home Loans Sales territories nationally, with significant increases in numbers of the developments signed. Key growth included the Western Cape, followed by KwaZulu-Natal and interestingly the greater Pretoria area.
“Overall, our statistics show that every region, with the exception of Limpopo and Mpumalanga, saw a greater number of new developments breaking ground in 2022 versus 2021,” he says.
“The KwaZulu-Natal region has shown remarkable growth in the past year, with a 1220% increase in bonds for homes in new developments,” comments Dyer. “This preference for homes within residential developments may be linked to an increased desire for security in the wake of the July 2021 riots in the province, which left many feeling uneasy at the prospect of living in freehold homes without neighbours close by.”
The abundance of new residential developments in this region is another contributor to the uptick in bond applications. Many of these developments are in ‘lifestyle estates’ all located in the sought-after KwaZulu-Natal North Coast area.
Lifestyle estates preferred by semigrators
Lightstone data indicates that the number of new residential developments located in estates is increasing on a national level – from 13.6% in 2018 to 15.8% in 2021.
“Many of the homebuyers of newly-built homes in lifestyle estates are semigrators: buyers who have relocated from in-land metropolitan areas to the coast and countryside in search of a more relaxed lifestyle,” Dyer explains.
The semigration wave saw a large spike during the COVID-19 pandemic, when many South Africans found themselves no longer tied to an office and left the city in search of ‘greener pastures.’ “Demand for estate homes has, however, been building steadily over the past decade.”
Dyer notes that in a country with high levels of crime, the safety and security offered by new developments in gated estates will continue to be a major drawcard for homebuyers.
“Affordability, lifestyle, and convenience are simply a bonus for these types of homes. Leading property developers have reported impressive sales returns this year and many developers are looking to cash-in on this ongoing trend. As such, developers who sell for the best price and offer the greatest amenities will continue to enjoy sustained demand over the next few years,” he concludes.
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