Coronavirus: How the economic slowdown will affect residential developments

Although this will be bad news for some, the typical new home brought to the market will be more compact than the already smaller homes of recent years. This is an absolute necessity because they simply have to be steadily more affordable. With SA’s growth rate now into negative territory and still dropping, the term “affordable” has taken on new meanings and implications. The solutions have to be more drastic and far-reaching, but the reduced sizes are compensated for by the improved sophistication, finishes, features and subtlety of the new configurations.

Limiting project size

Developers will reduce their risks by limiting the size of future projects. It will be common practice to see developments with as few as five or six homes being built. Alternatively, developers can, and often do, divide their bigger projects into several phases – each designed to be occupied (and paid for) as soon as ready. The need to reduce risk has also resulted in industry leaders moving away from sectional title in favour of small town houses, which also have the great advantage of occupation upon completion. By way of contrast, sectional title developments often cannot be occupied until the whole scheme, or at least the whole block is completed.

This swing to small town houses fits in with a growing desire among buyers to be “on the ground level” and to have at least a small garden. This is especially the trend when people convert to working from home part or full time.

South Africans of all income groups still recognise the economical and psychological benefits of home ownership. They are prepared to make big sacrifices to achieve this, although they are less affluent than before. They and developers are continually adapting to the new market conditions which will ensure the survival of the property market.