The global economy has shifted negatively since the start of the Covid-19 pandemic, and in South Africa the pressure is being felt by commerce and industry and the population at large as the lockdown continues.

Before the lockdown, the lacklustre property market offered little enticement for potential buyers, and sellers were reluctant to lower their prices to attract buyers. “With no precedent, it’s hard to imagine what our daily routine will be like emerging from the lockdown, and there is no trend or historical data that we can draw from to forecast the outlook of the real estate industry landscape,” says Sandy Walsh, MD Property.CoZa SA.

From 15^th April 2020, the bank prime interest rate dropped to 7.75%, the lowest it has been since 1973, and potential buyers may qualify for bonds that they were not able to afford in the past.

‘With the pressure of the lockdown and the expected after-effects, we envisage the Buyer’s market being amplified and the reduced interest rates will be in their favour. We foresee the low to middle value markets being the most active. A contributing factor could be that some homeowners may experience a greater debt burden and may need to consider lowering their selling price”, says Walsh.

Other factors may also come into play making the market more attractive for Buyers, such as:

• Banks competing for business, a great advantage for applicants,
• Lowered transfer duty and none payable under R1m,
• The recent interest rate cut and the increased number of properties on the market may make it more affordable to buy than to rent,
• Being able to afford properties that were out of reach as prices drop and affordability changes,
• Sellers adjusting their prices in line with realistic market value or who may be open to negotiations,
• Some properties in the luxury market may become more affordable as sellers disinvest and buyer’s benefit,
• Sellers possibly selling second homes, especially leisure homes, at lower prices,
• Sellers of investment properties not currently obtaining the necessary rent to cover the bonds and/or costs on their properties may be more eager to sell than previously,
• Vacant land might become more affordable as it is mostly cheaper to buy than to build currently.

It is a reality that South Africa’s investment status has plummeted, but there may be an opportunity or appetite for some foreign buyers or returning residents to buy in this time. Walsh advises that Property.CoZa does not expect the property market to boom post lockdown, but for a steady interest in certain sectors to stabilise and potentially start to grow over time. “Our Property Professionals are geared with state-of-the-art IT systems from which to operate from home or the office, and our continued investment in digital marketing tools will help them to continue to extend their marketing reach and ability to service our clients effectively, says Walsh.”

Once Government ‘unlocks’ the financial and legal sectors, specifically the Deeds Office and Rates Clearance sections of national municipalities, a great number of transactions, being properties sold prior to lockdown, will be lodged at the Deeds Office. “Restoring these vital services should bring relief and a speedy recovery to all the role-players in the real estate industry,” says Walsh.

In the meantime, its business as usual for Property.CoZa Property Professionals. Marketing and selling of properties continued during lockdown and will continue when we emerge from lockdown – that’s the real estate market!