Covid-19 will continue to hit SA property sales
JOHANNESBURG - The coronavirus (Covid-19) pandemic is likely to hit property sales in South Africa as earnings potentials continue to take a knock despite online searches through the lockdown.
Re/Max chief executive Adrian Goslett this week said the property market was likely to recover slowly after the lockdown despite rising interest as a result of a lower monetary policy environment in the country.
“In a recent meeting with our digital advertising partners, it was pointed out that the interest rate cuts have stimulated interest among buyers, as revealed by the increase in ‘buy a home’ search terms during this period,” he said.
Last month the SA Reserve Bank brought forward its Monetary Policy Committee meeting and cut the repurchase rate by 100 basis points for the second time in as many months.
The central bank slashed the borrowing rate despite warning that Covid-19 could see the economy contracting by a negative 6.1 percent this year as a result of curbed trading activity across the globe. However, Phase 4 of the lockdown has eased restrictions with property sales allowed and the deeds office reopening on Friday.
Huizemark managing director Bryan Biehler said the property business had changed to renewed emphasis on technology and digitalisation as a result of the lockdown.
Biehler said the group held 52 virtual showhouses in the first three weeks of the lockdown with 101 listings, 36 bond applications, 127 appointments and 45 sales. He said the industry as a whole would have to get used to learning new skills on an ongoing basis or face becoming redundant.
The way in which estate agents had dealt with the lockdown and the knock-on effect thereafter, may well define their success in the future, he added. Goslett said the interest rate cuts were only likely to help consumers keep up with debt repayments rather than allow them to take on new debt. He said lower interest rates also helped struggling homeowners to keep up with the instalments on their home loan. “If we do reach a point where too many homes enter the market as a result of the shrinking economy… a flood of homes will lead to downward pressure on asking prices.
“Eventually prices will drop to a point where buyers are incentivised to purchase again, which could lead to the market rectifying itself through a possible housing boom later down the line,” he said.
Another factor likely to drag on the property market post-lockdown was that it would take some time to process transactions that were already in line, he said.
Any new transactions would take longer to be processed and finalised as they await the re-opening of subsidiary services like the Deeds Office.
Goslett said sellers needed to be patient and realistic about their asking price if they wanted to close a sale after the lockdown period. He said buyers should enter the market as soon as they could, if they could afford it, due to the stagnant prices and low interest rate while homeowners needed to consider keeping loan repayments the same to save on interest costs and shorten their lending term. Biehler said big changes were likely for showdays for houses, as people would continue to practise social distancing – a property viewing would no longer fulfil a “viewing” purpose, but rather an opportunity to inspect a property, and only after considerable digital engagement had taken place.
He said buyers would soon likely also need to be financially “prequalified”. “In a negative economic environment, sellers are going to want to know what the financial position of potential buyers is if they’re going to agree to access due to the potential risks involved,” said Biehler.
Pam Golding Properties chief executive Andrew Golding said they anticipate that buyers would undertake a much more rigorous browsing process in the future preceding one or two physical visits to their preferred properties. “What the lockdown has quickly demonstrated is that as a key priority, and without precluding the expertise and negotiation skills of our agents, who are all currently operating remotely on a decentralised basis, we needed to rapidly re-engineer the real estate transaction process to be capable of transacting from a to z online,” Golding said.