Industry leaders step up to offer sellers, buyers calming advice in trying times
As we enter these unprecedented times, many questions have arisen as to how this is going to affect the local property market. Like all markets, ours is not immune to the great uncertainty that Covid-19 has brought about and relies heavily on confidence in the future to thrive.
These uncertainties include job security and whether South Africa will see a protracted or short-lived recession resulting from the economic disruption we are facing. Sellers are going to need to be more patient as buyers hold back their purchasing decision to conserve cash and minimise their outings, such as viewing show houses and meeting attorneys, agents and their bankers.
This is however critical, given the president’s lead, and our collective responsibility, to exercise social distancing. Most property companies are already encouraging agents and staff to work remotely and to minimise person-to-person contact. These calls will be amplified as they have in places such as London, Amsterdam, New York and California.
This is the best tool we currently have to delay the spread of this pandemic. It is difficult to judge the longer-term impact Covid-19 will have on the world’s real estate market. Some economists are currently forecasting a short and sharp global recession in 2020 with a global bounce-back potentially in mid-2021, given the high level of economic stimulus packages introduced by countries around the world.
Here, the South African Reserve Bank has slashed interest rates by 1% – its biggest margin in more than a decade, with further cuts of potentially 0.75% to 1% on the cards. However, the national Treasury has been silent so far on what measures it proposes to support the local economy. I think, as the 2008 global financial crisis and previous recessions have shown, things can get tough but the world is incredibly resilient over the longer term and we will come out of this and stronger than before.
But right now everyone’s priority and responsibility is to minimise the spread and flatten the curve, as this time around human lives are at stake. Sellers and property owners should take comfort in the fact that physical property has tended to be more resilient and stable compared to some of the listed counters, as we’ve seen massive volatility over the past month.
Sellers should not be completely despondent, as history shows that often activity is not necessarily destroyed, but rather delayed.
These are certainly unprecedented and challenging times, and there is no doubt that the coronavirus crisis has further disrupted an already beleaguered housing market, but I believe South Africans still have every reason to buy and sell with confidence.
The 2008 financial crisis began as a housing one and, thankfully, the source is different, which should be seen as a positive in itself. In fact, our US affiliates have seen an uptick in the rental sector since the Covid-19 outbreak and, locally, some of our branches have recorded a record month so far for March, in spite of what is happening around the world.
The serious buyers are out there right now and there is a sense of no dilly-dallying with a heightened sense of urgency from some clients. So, avoid the knee-jerk reaction of taking your property off the market. Now, more than ever, people have time to look for homes and with most being stuck at home I expect there will be a lot of online browsing in the weeks to come.
Obviously, business must be conducted differently for now but there is no reason for it to grind to a halt. It been really heart-warming and encouraging to witness the innovation and lateral thinking that agencies are showing in their efforts to continue to conduct their business and service clients with as little disruption as possible.
People still need somewhere to live and I believe a good property that is realistically priced will sell well in any market – and that investors who take action sooner rather than later will not only see an upward shift in property values but benefit from it. And, with the technology now available, it’s possible to virtually view homes in as much detail as one could by actually visiting the property and video conferencing enables remote meetings.
Documents can also be signed digitally and online document storage is available. As industry professionals have to co-create this new space with our clients, this will result in an efficient new normalcy for the time being. Remember that as overwhelming as this seems right now, it is a short-term health crisis and both the market and the economy will rebound once the pandemic abates.
The property industry contributes an “essential” service to communities across our country. It ensures people have a roof over their heads, that urgent property needs are met and, in the commercial sector, that goods and services are available in a safe and hygienic environment for communities to access.
In the light of President Cyril Ramaphosa’s declaration of the fight against Covid-19 as a national disaster, we believe it is all of our responsibility to keep ourselves and the people around us safe as well as to continue providing value-adding property services.
The good news for consumers is that the operational challenges presented by the current situation have been taken head-on, both by estate agencies and other stakeholders and role-players in the property sector. Many sellers, buyers, landlords and tenants were in the middle of a property transaction when the disaster was declared over a week ago and might be unsure of what to expect.
More will be done on digital platforms, with all parties using secure document transfer and sharing platforms, including email. Clear and constant communication between all relevant parties is essential in ensuring that issues are identified in good time and alternative arrangements made.
The recently announced 1% drop in interest rates is a welcome relief, as households should have more disposable income available to cover monthly home loan repayments. However, buyers should be cautious about taking the rate cut as a signal to get a bigger home loan than they were previously planning.
This cut and the further ones expected later this year will reduce rates close to historic lows, which means they can be expected to rise as soon as the economy improves. In terms of loan repayments, Nedbank was the first to announce a payment holiday, and we are sure other commercial banks will follow suit, or that the government will instruct them to, across the board.
As the Rawson Property Group, we implore commercial and residential landlords to consider passing this reprieve on bond repayments to their tenants. We also encourage the government to consider offering relief from property-related taxes and utilities, in the form of payment holidays, extensions or rebates.
In our own Rawson stable, we are relying heavily on our ecosystem of tech tools to ensure that our agents are able to continue offering excellent service to current and future clients. Last week, the Rawson leadership team put a task team together to manage the efficient and effective operation of everyone in our brand and our clients alike, ensuring that they are supported and informed and able to continue offering clients the best service throughout this unprecedented time.
During these troubling and uncertain times, it is often difficult to spot the light at the end of the tunnel but I believe we can, in fact, combat this virus and come out even stronger.
Amid these unprecedented times, one often wonders “where to from here’’ and the answer is “only onwards and upwards’’. It is important to look at the positives and there are quite a few of those for the property sector, despite all the negativity that clouds it. The major positive that we can take away from this, as members of the property industry, is the 1% drop in repo rate.
This is excellent news, especially for first-time buyers as it makes buying a home more affordable and more attainable. The market remains a buyer’s market.
Sellers are still looking to convert bricks and mortar into cash and buyers are still looking for the safety and security of owning a home. I believe, in months to come we will see more relief for property owners and buyers as the government and the industry step forward to assist.
Having monitored the international situation very closely, I realised South Africa would not escape the chilling effect of the virus on the property market. However, we South Africans are a resilient people and we have come together not only to fight this virus but to get together as one united front – each person looking out for another, all trying to do our bit to help. There is something beautifully poetic about having celebrated Human Rights Day this past Saturday.
Even though public celebrations were put on hold, and the majority of people were in isolation, it was clear that we were all coming together, as one. There was a kind of unspoken unity between all of us, and despite the havoc this virus has caused, it has proven one thing, and that is the power of faith and camaraderie between us.
There is hope through all of this panic and turmoil and that is once we have conquered this virus, we will not only have survived it, but we will be on our way to thriving, because innovation will come from this crisis. Be sure to take care of yourselves and your families during this time.
Hold together, keep the faith and trust that we, as proud South Africans, can and will ride out this storm, together and unified. It is understandable that these unprecedented times can cause fear and panic. But I do believe these times will also provide a fantastic opportunity for innovation and there will still be deals done as people seek out normality.
This is also a wonderful time for changing how we operate as humankind. Thanks for being part of our journey at Greeff up to now. We are still here for you with any questions you have around property right now.