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.
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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
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