What's in store for the property market in Q4?
Category Property news
It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change. This comment, attributed to Charles Darwin, could just as easily sum up the world economy in 2020.
Ryan Greeff, Director at Greeff Christie's International Real Estate - City Bowl, Northern Suburbs, Atlantic & Western Seaboard says, "policymakers adapted quickly to counter the impact of Covid-19, providing massive stimulus to their economies. Some countries even ventured into Modern Monetary Theory, the fusion of monetary and fiscal policy. As a result, many economic experts and investors alike are indicating that the global V-shaped recovery remains on track."
"Third world economies haven't been as fortunate and whilst the South African government has tried to plug the financial hole the lockdowns have inflicted, the lack of stimulus packages and financial support for companies has left a path of economic devastation in its wake. This is evident from high unemployment numbers in SA as well as the mass closing of a large number of predominantly small to medium-size enterprises which account for the lion's share of the SA economy. At this point, low-interest rates seem to have kept the property market somewhat propped up amongst the chaos in the middle to lower-end price brackets however we are seeing cracks starting to surface."
Marthinus Botha, Managing Director at Greeff Christie's International Real Estate - City Bowl, Northern Suburbs, Atlantic & Western Seaboard explains, "across the Western Cape, financially distressed sellers are slowly but surely becoming commonplace as bond payment holidays are coming to an end. Whilst it's not yet at the point where it's adversely affecting property prices or sales turnover, it seems to be headed that way."
"Eyes are on Tito Mboweni's up and coming mini-budget speech whereby it's expected that he will outline how Government plans to raise numerous taxes in order to cover the large budget deficit the country is facing. Again, this could be a catalyst to add more financially distressed sellers to the market in the short to medium-term" Botha concludes.
Trent Gibbons, Senior Broker at Greeff Christie's International Real Estate says, "another big question mark as we head into Q4 is if South Africa will experience an aggressive second wave of Covid infections akin to what Europe, for example, is currently facing and if so, when? If this unfolds and further lockdown measures are implemented, we will almost certainly see prices fall significantly across all price brackets unless there is a drastic stimulus response by the government, coupled with aggressive policy intervention. Homeowners looking to upscale/downscale may not be getting 2017 prices for their properties, however, they are seeing the value of lessor transfer duty, capital gains taxes, and the discounted prices they are receiving when purchasing, making it somewhat more attractive to trade."
Justin Nortier, Senior Broker at Greeff Christie's International Real Estate explains, "the rental market across the board is roughly 30+ percent down due to a multitude of factors that have lead to an oversupply. In turn, this has sparked a sell-off amongst a large number of investors as yields have come under significant pressure and the opportunity cost of waiting for an economic recovery in SA is high given that first-world global equity markets, for example, are recovering much faster and don't carry the high rand/dollar volatility."
With the "selling season" firmly upon us, we are starting to see more and more homeowners that were previously sitting on the fence now putting their properties on the market to take advantage of the current window of stability.
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Author: Greeff Christies International Real Estate
