Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett:
“I commend the president for taking such a proactive measures against this pandemic. After speaking to Dario Castiglia, Regional Owner for RE/MAX Italy, I was convinced and firmly believe that a full lockdown is the answer to flattening the contamination curve and making sure that our hospitals do not get overrun by new cases.”
“This lockdown will bring the economy to a standstill if businesses fail to get creative with their offerings and their operations in order to remain productive within this situation. To protect our economy, I would encourage all business owners to use this time wisely. If the business is unable to generate income over this period, use the time to develop your business goals and to work out a plan on how to recover once things return to normal. As business owners, it is our responsibility to do what we can to make sure our economy keeps on running.”
“The housing market will inevitably take a knock over this time, especially if the Deeds Offices close and property transfers are delayed until they reopen. Many buyers will also be reluctant to sign an OTP without ever seeing the home in person.”
“But, there are things real estate professionals can do to minimise the downsides of this situation. Agents should still be following up with clients via virtual tours and face-time conversations, trying to line up as many sales as possible so that they can hit the ground running as soon as the lockdown period is over. To protect buyers who purchase homes over this time, agents can draft OTPs with a suspensive condition that stipulates that the purchase will only go ahead once the home has passed a physical home inspection which can be conducted once the lockdown has been lifted.”
“I back the president in his decision to launch a full lock down. I believe that it is the most responsible course of action in response to this pandemic. As business owners and entrepreneurs, it is our duty to support this decision while doing what we can to keep our economy afloat by planning for businesses continuity after this period of isolation is over.”
Dr Andrew Golding, CE of the Pam Golding Property group:
“While last night’s announcement by the President has dramatically changed the lives and lifestyles of South Africans, time has proven that as a united country, and within our local communities, we have the ability to harness our indomitable spirit and overcome challenges and hardships.“
“From a residential property market perspective, historically, recent international experience reveals that global economic shocks of this nature inevitably cause property transactions to taper off, as other priorities take over.“
“However, within the property industry, and despite the lock down, the rapid adoption of new technology is delivering the benefits of ensuring that the industry is already geared to largely operate and transact electronically, coupled with personal interaction – albeit at a distance at present.“
“The fact that interest rates are close to historic lows following last week’s 100bps reduction in the repo rate, with the possibility of additional reductions in the months ahead, presents an opportunity for buyers, particularly in the price band below R3 million where there remains a strong demand for accommodation to buy and rent. This is coupled with the benefit for buyers of properties valued up to R1 million, where no transfer duty is payable, plus anticipated further reductions in the interest rate during the course of the year. And, being a buyers’ market, currently there is a good selection of properties across all price ranges available to view on-line and electronically via our agents.”
“Notably, there have only been two previous occasions since 1970 when the prime interest rate has been cut this low. Prime was at 8.5% between July 2012 and December 2013 and was below current levels in the early 1970s. However, real prime interest rates reveal that there is still room for further reductions.”
“This is because, when adjusting for inflation, it is evident that real interest rates remain fairly high by historical standards. As March 2020 inflation has not yet been released, the most recent figure we have is for February (ie before the recent 100bps rate cut), when real prime interest rates were at 5.15%. Double digit inflation from the mid-1970s until the early 1990s saw real rates drop into negative territory on several occasions during this period.”
“With the extreme volatility currently being experienced in global stock markets, it is probable that, as has been seen over decades during times of great turmoil, we will see increased confidence among investors and home buyers in bricks and mortar as a resilient and solid asset class“.
“As property has over the longer term proven a sound investment, it stands to reason that many will regard the residential property market as a safe haven amid the current heightened economic uncertainty“.
Source: Propertywheel.co.za | https://propertywheel.co.za/2020/03/commentary-south-africas-lock-down-and-the-possible-effects-on-real-estate/