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www.thevillagenews.co.za
6 May 2020
MY HOME
The post-lockdown property market By Stephen de Stadler Managing Director Fine & Country Hermanus, Arabella and Kleinmond
A
t the time of writing this column, we are in our first week of Level 4 lockdown. Being released from the confines of our homes for a three-hour daily exercise routine was met with joyous abandon on the first morning. Unfortunately, many people also forgot the cardinal rules associated with Level 4, including social distancing, the use of cloth face masks, and effective sanitation and hygiene at all times. I sincerely hope that all those enthusiastic runners, walkers and cyclists who chose to exercise in groups and without face masks will be more compliant in future, as the last thing we need is a return to full lockdown. Now let us consider what is happening to the real estate market. As the regulations currently stand, commercial real estate agencies may begin operating from Level 3, whereas residential real estate may only begin operating at Level
2. For an industry that contributes between 4 – 5% of our annual gross domestic product, and is able to apply the cardinal rules as referred to above, these restrictions do seem rather harsh.
in the ability of the country to show economic growth over the next few years. As a big part of that economic growth, it is important for the real estate industry to get back to business.
I fully agree that no show days should be held until this entire pandemic has been eradicated or bought under control, but viewing by appointment can be effectively and efficiently implemented. By using disposable gloves and face masks, washing and/or sanitising hands, and maintaining social distancing between buyers and sellers, this will not pose any greater risk than visiting the local supermarket. Delaying the start of the normal process of selling and buying homes could have a more negative impact on the property cycle than is ultimately necessary.
Any seller of property at this time should be asking themselves the following key questions: • Do I really need to sell? • What price do I need to fetch? • Which agency will be able to assist me the best?
In my last column I spoke about the downgrade by Moody’s of the South African Sovereign to non-investment grade, albeit to the first level of what is also known as junk bond status. During this period of lockdown, Fitch Ratings has also downgraded the Sovereign to the 2nd tier of junk bond, and Standard and Poor’s has just downgraded the Sovereign again to the 3rd tier of non-investment grade. All these downgrades are taking place because of a lack of confidence
The first question is essential, because the best advice any estate agent can give a prospective seller is to rather list a property when it’s a sellers’ market. No one knows when the next sellers’ market will arise, but we do know it is not going to happen in the short (1 year) to medium (up to 3 years) term. I will gladly be proven wrong in this regard in the future because it will imply that we are seeing tremendous economic growth in our country! If the seller does want to sell in the current market, the second question is essential in any sales environment. A buyer and a seller have to agree on a price in order to conclude a transaction. The price a buyer is prepared to pay is normally based on a review of the area, the price of
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typical homes that are available for sale in that area, as well as an understanding of what has previously sold. If the price the seller needs is not within the accepted buying range, then the seller needs to either reconsider the asking price, or take the house off the market. The third question is going to become even more relevant post-lockdown. The agency that is going to best assist you as the seller, is one that is able to show you an appropriate valuation or marketing range, based on some sort of statistical analysis. The best estate agent is not the one that offers to market your house at any price. At this time, the weakened value of the Rand as compared to most of the significant foreign currencies means that our homes are less costly in converted foreign currency than they were before. The best agency may thus be one that has the ability to tap into an international market of potential buyers. Here’s hoping that we’ll return to some level of normality in the not-too-distant future. The views expressed above are those of the writer in his personal capacity and may not necessarily reflect the views of Fine & Country as a national and international brand.
