Property is still being sold, despite restrictions, and experts say repressed demand could lead to healthy market activity when they are lifted
The extension of the national lockdown has increased pressure on the property market but mounting demand might well boost it out of stagnation once restrictions end.
Each day of lockdown delays real estate market recovery and the flow of funds from the market into the fiscus because transfers can’t be finalised until the Deeds Office reopens.
Good news, however, says Berry Everitt, chief executive of Chas Everitt International Property Group, is home buying is continuing, despite the fact that show days and private home viewings are no longer being held.
“In fact, we are seeing an increasing number of ‘lockdown deals’, which agents are able to facilitate using top technologies and international best practices.
“These include sales from R600000 all the way to R36 million, in areas from Still Bay to Benoni, Hermanus to Hyde Park, Plumstead to Pretoria.”
Again on the positive side, Yael Geffen, chief executive of Lew Geffen Sotheby’s International Realty, says there is likely to be “considerable repressed demand” which will definitely result in market activity once lockdown ends.
“And, with the precarious state of global stock markets, property will be seen as an extremely good investment – as it always is in turbulent times.”
Although acknowledging “all is certainly not rosy”, Geffen says the agency is, nonetheless, seeing an uptick in rentals and increased activity among foreign buyers taking advantage of the extremely favourable exchange rate and accessible pricing.
This foreign demand is acute in Joburg’s upmarket suburbs, in which there has been “little activity for the best part of two years”. The repo rate cut this week, taking it to a record low of 4.25%, also creates a favourable environment for real estate investment.
“The property market always works in cycles, regardless of extenuating circumstances, but Geffen cautions: “Unfortunately, there will be fallout from this challenging period. Many small agencies are likely to close; cash flow stringencies will simply strangle their operations. Jobs could be lost in the sector as I suspect many agencies’ administrative teams will shrink. Virtual reality has become the new reality.”
David Sedgwick, managing director of Horizon Capital Residential, agrees the extension will put further strain on the industry, especially as many developers and estate agencies have outstanding matters at the Deeds Office and are waiting to lodge new material.
Therefore, the re-opening of the office will allow transactions to be registered and “greatly help with cash flow”, he says. Consumer sentiment was “extremely cautious and hesitant” before the announcement of the lockdown extension and, following it, the predictions on South Africa’s epidemic trajectory.
There is, therefore, a general sense people will continue in that vein and avoid taking on large debt until they have peace of mind and job security, he says.
“The timeline on this is hard to pin, but the South African economy is extremely weak at the moment; it may well be 12 to 18 months at least before confidence returns.” Sedgwick says the repo cut will also support the property industry by making buying more affordable.