Digitalising Real Estate Lockdown Real Estate Guide | Page 6

COVID-19 COVID-19 vs Property market Virus impact unlikely to derail residential property market CARL COETZEE T he spreading of the COVID-19 to reach South Africa might have been said to be expected by the health minister in SA, but when it hit the country things turned all the way around. Soon after discovering a couple of cases in South Africa, the president Cyril Ramaphosa addressed the nation about and declared the outbreak of COVID-19 a national disaster in terms of the Disaster Management Act. He assured everyone that all necessary measures and systems will be mobilised to contain the spread of the virus and to limit the effect it will have on the economy. Nobody is safe The question around the pandemic’s impact on the property market is an important one, as the real estate market is keenly affected by the overall health of the economy, consumer confidence, and levels of employment in particular, which means that major disruptions in other sectors will have at least some impact on the property market. Having said that, property tends to be a far more resilient investment type than most. We’ve seen equities being significantly affected, while property has remained fairly stable. International news platform CNBC reported that residential real estate in the US appeared to offer investors the calm they were looking for in the coronavirus storm. Traditionally, property is far less volatile than the stock market and has a high tangible asset value. Irrespective of the impact the virus has on society people will still need accommodation which offers a measure of security in terms of a property investment holding ground in times of turmoil. What’s more, property is an asset class with supreme resilience and a unique ability to “bounce back” as market conditions improve. 4 COVID-19 - 2020 The prevailing market conditions too, the so-called buyer’s market, are further reasons to not shy away from property investments in the time of COVID-19. Buyer’s market Asituation where the supply of property exceeds the demand for property, bodes well for those looking to purchase property since prices are generally lower in this type of market. Add to that the fact that banks are open to offering 100% home loans to qualifying individuals. The threshold on transfer duty was raised to R1 million recently, meaning that transfer duty costs are lower for buyers, and that it is speculated that interest rates will be dropped by at least a further 25 basis points later this week. Now is a good time for investors to remain at least slightly positive about the immediate future of property. Our advice is to ensure that you buy at the right price, that your affordability is in order and that you don’t extend yourself too much when acquiring a new property. Putting down a deposit is always a good idea and might mean that you can get a better interest rate on your bond. At this stage we must caution against panic, and while we need to take the necessary measures in order to protect ourselves and our families, we also need to think as rationally as possible about property, and about investments in general. SOURCE BetterBond COVID-19 - 2020 5