Low interest rates and an abundance of choice make for the perfect property purchasing scenario but many buyers are still not biting. The current and long-term economic environment has left them cautious about taking the next step, while more sellers are being forced to list their homes due to the impact of the lockdown.
This situation could result in a shortage of buyers and an excess of stock, says Roger Hoaten, managing director of Seeff Berea in Durban. “At the lower end of the market, though, the effect will be less pronounced.” And in the first-time buyer market there is sustained demand, he says. The buyer’s market will remain for the rest of the year at least, driven by an oversupply of property and low consumer confidence, agrees Herschel Jawitz, chief executive of Jawitz Properties.
“Property prices will remain flat and may even fall in both nominal and real terms in the coming months.” While acknowledging that “better than expected” buyer activity has been seen since the property industry’s unlocking at the beginning of last month, he says it remains to be seen whether this is pent-up demand from two months of low activity or something more sustainable.
Jawitz also believes the first-time buyer market of properties up to R1.5 million could be particularly active. Joff van Reenen, director and lead auctioneer of High Street Auctions, says property owners should not sell unless they really have to. The road to recovery is going to be “long and arduous”.
“For buyers, it’s the sale of the century with the lowest interest rates in 50 years and more sellers every week.” There is talk of another interest rate drop in September, says Just Property chief executive Paul Stevens. Yet, with businesses suffering, as well as salary cuts and job losses, people still want to sell their houses.
“This leaves a gap for buyers being able to acquire assets at a lower price than usual.” While agreeing that there is movement in the market, Sabrina Errico, broker principal for Lew Geffen Sotheby’s International Realty in KwaZulu-Natal from Blythdale to Durban North, says even the most ardent investors are being cautious.
“Forced sales due to downscaling or relocation to seek work will result in buyers being active but they will probably procrastinate more than in the past. “First-time buyers may be coaxed into action by attractive financial packages but they will need much more convincing and confidence before they do.”
In Cape Town, Jeremy Barnes, South Peninsula regional manager for Greeff Christie’s International Estate, predicts a robust market in the short term. This will be driven largely by semigration as up-country buyers take advantage of the good value on offer in the Cape following the closure of their businesses due to the lockdown.
Greeff property broker Garrick Sutton adds: “Purchasers have had to hold back for the past two or three months and now that the market has reopened, this pent-up demand has shot us into a situation where we have more buyers looking to enter the market than we have had in the past 18 months.”
In the Cape Winelands, a “considerable amount” of stock has already been sold since reopening and there could even be declining levels of stock on the market, says Chris Cilliers, chief executive and co-principal of Lew Geffen Sotheby’s International Realty in the region. “Once national and international flights resume, we hope to see more Gauteng buyers and international buyers looking to benefit from the weak rand.”
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