Industry Bounces Back After The Storm
Category Industry News
As the Covid-19 pandemic continues to sweep the globe, there is positive news for buyers - and sellers - in the local real estate space, with a significant uptick in movement of properties since 1 June.
You would think that a global pandemic, added to an already-struggling economy would damper the real estate industry, but there is certainly room for optimism with figures showing a positive turn on the local front.
There are a number of reasons for this upward movement, according to The Agency Property Group's, Kyle Leigh, who confirms the positive sentiment The Agency has seen since the industry was allowed to operate under national regulations since 1 June.
"We have seen a big up-turn in sales since 1 June," says Leigh.
"Not just for The Agency, but the industry in general. There has definitely been a huge shift in the market, and that is obviously due to some pent-up demand, with potential buyers coming out of lockdown - either looking to downscale or perhaps looking at bigger spaces in light of what this period of time has taught us about spatial awareness.
Leigh also points to what he terms 'the perfect storm' that has contributed to the positive turn status of the industry. A surplus of stock and the South African Reserve Bank's decision to cut the country's rates significantly has certainly made it more attractive for prospective buyers to dip their toes into the market.
The Reserve Bank has cut a total 300 points this year to date, lowering the repo rate to 3.5% and the latest cut - in July - reduced prime and the base home loan rate to an historic low of 7.0%.
"It was already a buyer's market before lockdown, with a large amount of stock for buyers to choose - and barter on - and with the massive interest rate cuts during lockdown, it has led to the perfect storm. It's been a tough time for the country in the face of an unprecedented pandemic, but there is no doubt about it... property is moving."
With the property market showing plenty of resilience and recent factors playing out in its favour, the rest of 2020, however, is still difficult to call, which is very much in line with what has already been a rollercoaster of a year.
According to an article on IOL, FNB Economist Johan Loos uses the 2008/09 recession, and the resultant road to recovery, as an example for the current crisis. Loos believes that residential property may come out stronger than the likes of commercial property and the retail space.
''The Sector least at risk through this crisis, we believe, is the Residential Property Sector. This is not to say we don't expect some noticeable price deflation in residential this year. It too cannot escape a deep recession. But hereafter, residential property appears unhindered by technology. We can't live online or remotely. Residential densification is likely to continue its long-term trend, but we all need to stay somewhere. In fact, residential property and its design becomes arguably more important now, assuming that the remote working trend accelerates, given that we appear likely to spend a lot more time in our homes in many instances,'' says Loos.
Leigh agrees, "While we are coming out of lockdown and businesses are starting to trade again, people are still under pressure. We will continue to see a market full of opportunities for the rest of 2020 before we start seeing a rebound and recovery phase in 2021."
Author: The Agency Property Group