Good news for South Africans who want to semigrate

Many South Africans delaying a move to the coast because they feel “bond-locked” may be able to relocate sooner than they think by understanding their home equity, financing options, and the true costs of moving.

According to recent FNB Property Barometer data, national house price growth ranged from 3.4% to 3.7%, with the Western Cape outpacing inland property pricing.

As a result, a growing number of homeowners who believe they’re “bond-locked” are postponing their move to the coast.

However, Just Property CEO Paul Stevens said that while some households are under financial pressure, many others can relocate once they understand their equity, the costs involved, and their options.

“When people talk about being ‘bond‑locked’, they’re describing the feeling of being stuck,” he said. “We’re seeing this among inland homeowners who want to move to the coast but believe that their current equity won’t cover coastal prices.”

“With entry-level pricing in inland suburbs from around R1.2 million, and comparable coastal homes upwards of R1.8 million, this difference is reinforcing their belief that a move is out of reach.”

The South African Reserve Bank’s decision in May to hike the repo rate by 25 basis points to 7% – thereby raising the prime lending rate to 10.50% – has added to affordability concerns.

“However, according to FNB, 67% of estate agents are expecting market activity to increase,” Stevens explained.

“Further, data from BetterBond shows that the banks are aggressively competing for market share, with some offering below-prime rates to strong buyers.”

He added that people are still moving, but what’s really changed is the level of planning required, because buyers can’t wing it in this market.

South Africans wanting to move to the coast are also misinformed about how to sell their inland property. The most common misconceptions include underestimating their equity and overestimating the cash they need to move.

Sellers often also assume that coastal markets are completely out of their reach, delaying pre-qualification and thinking that they have to sell before they can explore their options.

Before thinking the worst, Stevens recommended doing a cost breakdown along the lines of this one for a R1.5 million sale, but updating the costs according to the selling price and thresholds:

More good news

The picture becomes even rosier for many of the homeowners who bought between 2016 and 2020. That’s because they’re often sitting on significant equity, even if they don’t realise it, Stevens explained.

“Industry records show that the average purchase price for first-time buyers has risen to just under R1.2 million, while the national average has climbed to R1.6 million,” he said.

“A property bought for R1.2 million in 2018, for example, may now be worth closer to R1.6 million, depending on the area and its condition, of course.”

Stevens noted that South African homeowners tend to underestimate how much equity they have built over time.

“When we show them the actual numbers, the conversation moves from ‘I can’t move’ to ‘I didn’t realise I had these options’,” he said.

He recommended that, in the current market, families focus on what they can unlock rather than what they cannot afford.

“First, get your property professionally valued. Once you know what your equity is, you’ll be able to make a decision based on fact, not fear,” he said.

Stevens added that if the home has value-adds like green, energy-resilient, and safety features and is priced correctly, it will likely sell quickly.

Buyers could also consider shopping in suburbs that may not be their first choice, but which offer a similar lifestyle and better brick-and-mortar value.

“Proximity to schools and workplaces is becoming just as important as square meterage, with more and more people buying homes that support their lifestyles and budgets, not just what they own,” he said.

According to Stevens, it may also be worth reconsidering sectional title properties as an alternative to freehold homes.

“Sectional title units are generally the most affordable entry point in coastal areas, with lower maintenance and running costs,” Stevens said.

“Feeling bond-locked and being bond-locked are not the same thing. Once homeowners have the facts in front of them, many realise they’re far less stuck than they thought.”