Selling your house? What can property expect from Covid-19?
Home-owners who wish to sell now should anticipate that the process could take an additional two to four months – and then only if they are working with an agent with access to the most advanced property marketing and transaction management technology, as well as extensive local and international referral networks.
So says Berry Everitt, CEO of the Chas Everitt International property group, who notes: “No-one can definitively say yet what the Covid-19 pandemic will do to real estate markets, but we can gain some insight from what happened during the SARS, H1N1 and other previous virus outbreaks.
“These also caused stock prices to plunge, especially in the travel, tourism and banking sectors, while causing volatility in property markets that stabilized within three to six months. And that stability is likely to come earlier for those who are working with top agents.”
“Even so, the effects are not likely to be uniform, especially in SA’s very diverse residential sector. Higher earners who have had their wealth diminished by falling equity prices might withdraw from the market, but some might be inclined to increase their property holdings now in recognition of the fact that while growth in this sector is slower, it is still a lot less risky than the stock market. In addition, it affords investors many opportunities for tax relief.”
The Rand could also play a role here, he says, as those buyers with foreign currencies such as dollars, pounds or euros can currently acquire property in SA for much less than they would have two months ago, thanks to the devaluation of the currency in recent weeks.
“On the other hand, he says, the steep one percentage point cut in interest rates this week could prompt many first-time buyers and buy-to-let investors to go ahead with their purchases as soon as possible, especially since urgent sellers are likely to be more negotiable now and the banks remain keen to advance home-loans.
“Ironically, the rate cut was largely made possible by the sharp drop in oil and petrol prices that were the direct result of the Covid-19 pandemic. This drop has not filtered through into the inflation rate yet, but is likely to do so within the next few months and bring SA consumers some further relief.”
Meanwhile, says Everitt, some sellers, wary of having strangers in their homes at this time, are pulling their properties off the market, and this is underpinning prices. “Another positive for the SA market we are picking up now is that many of those who were contemplating emigration within the next couple of months have put their plans on hold – and may do so indefinitely depending on the effects of Covid19 on other economies.
“So at most, we are expecting a short, sharp shock to the property market and, in line with the latest surveys conducted by the National Association of Realtors in the US, a possible 10% decline in sales for 2020 as a whole – although this is by no means a given in groups like ours, which has made massive investments in technology over the past few years that now put us in a strong position to absorb the impact of Covid-19.
“Having anticipated the growth in the remote working trend, we have made sure that all our agents are equipped with everything they need to work efficiently and deliver exceptional service, whether they are at home, in the office or in their car. For example, we are easily able to provide prospective buyers with video tours so they don’t have to visit homes physically to view them.”
In addition, he says, the group has a huge array of online marketing platforms locally and internationally and, through its affiliation to Leading Real Estate Companies of the World, access to the referral networks of 575 other top brokerages globally.
“Consequently, we are expecting positive if slower sales growth for the next few months, and a rebound once the virus scare has passed.”