Real Estate Investor Magazine South Africa May/ June 2020 | Page 10

COVER STORY Real Estate 2.0 survival post lockdown What to expect, trends & where to invest NEALE PETERSEN LOCKDOWN SURVIVAL T here is a lot of uncertainty and speculation around how various sectors of the economy will perform once we fully emerge from the national lockdown and re- turn to business as unusual. One sector of the economy that has been greatly impacted by the COVID-19 pandemic is the housing market along with retail and office market sectors. While interest in the property market has been stimulated through interest rate cuts, affordability remains a key concern for buyers and sellers alike. “The SA economy is in crisis and unfortunately politics affects the economy,” says Dawie Roodt, economist for Efficient Group. For the last 10 years we have experienced crisis after crisis before Corona (BC) and were heading for a recession anyway as a result of mismanagement of the economy resulting in unemployment highs in excess of 30%. He says: “Essentially state finance has collapsed. Expropriation without compensation will happen even it is for symbolic reasons, which will result in property invasions. Poverty will soar and it will kill more people than corona while business confidence is at record lows. We are still in for a in for a very rough ride, according to Roodt. Many are comparing the COVID-19 crisis to 1929 depression, Weimar Republic in 1933 and 2008 global financial crisis. The jury is still out which is worse, the question is what is the silver lining and positives we can take from this crisis. In the residential sector Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, CEO RE/MAX SA believes that interest rate cuts have stimulated interest among residential buyers. This was revealed by an increase in online houses searches according to Property24 during lockdown. It is unlikeIy that this peak in interest in property will result in sales growth in the residential sector as few South Africans are able to afford to make such a large investment at this time as the earning potential of many has been either directly or indirectly impacted as a result of COVID-19. “Cuts in interest rates are only likely to help consumers keep up with their debt repayments rather than allow them to take on new debt,” says Goslett. Affordability of property has increased. However, property transactional costs are still too high. More distressed owners will be forced to sell and investors have an increase in delinquent tenants. Retail is under severe threat and could disappear or collapse. Less offices as a result of more people working remotely could impact the buying of residential property in the future. with The expectations after lockdown as to how businesses is survive and thrive remains to be seen, the bigger picture and not looking good in the short-term. There will be winners losers and some will take more pain than others. 8 MAY/JUNE 2020 SA Real Estate Investor Magazine If we do reach a point where too many homes enter the market as a result of the shrinking economy and an inability to afford home loan repayments, the market will fall into a lull before correcting itself. “A flood of homes to the market will lead to downward pressure on asking prices. Eventually prices will drop to a point where buyers are incentivized to purchase again, which could lead to the market rectifying itself through a possible housing boom later down the line,” Goslett explains. MD of digital auction platform BidX1, MC Du Toit’s advice to sellers is when a fair offer is presented, it should be considered, with the best offers being unconditional. “I would advise against listing a property at a high price and then negotiating down, but to rather list the property at an opening bid, get buyers involved and negotiate the price upwards. If this is done correctly, the seller will achieve the best result. “For buyers, savvy property acquisitions are good investments and in the current volatile economic environment, increasingly so. There certainly is no better time to buy. Debt holidays for residential bond holders To assist bondholders South Africa’s major banks have introduced various measures to assist consumers who are impacted financially by the coronavirus disaster and the protracted lockdown. Most of the assistance comes in the form of three-month debt holidays on loans ranging from mortgages to credit card balances. Some consumers will automatically receive these payment holidays, while others have to apply to their banks. Financial assistance on offer at SA’s major banks during Covid-19 disaster Absa  Individual customers who owe Absa money will be invited to take an up to three-month repayment holiday, regardless of the kind of loan or how much money those customers earn. As of 01 April, ABSA will pre-screen customers and send an SMS offering this capability to their customers who will be able to opt-in or out. Customers can contact ABSA using the following e-mail address: [email protected]. Standard Bank  Standard Bank is offering all of its personal banking customers, and business clients who earn less than R20 million a year, a three-month debt holiday until the end of June. Clients earning R7 500 or less and students will automatically receive the three-month holiday, while other banking clients can apply for the relief by contacting the bank. Standard Bank has offered various relief options to assist homeowners towards meeting their financial obligations.  To find out more emaildebtcarecentre@ standardbank.co.za or call 0860 123 000. FNB  First National Bank (FNB) will be offering debt repayment holidays of up to three months to its customers, but strict terms and conditions apply. Clients will need to contact the bank, and have a letter from their employer to show loss of income due to the novel coronavirus. Those who are self-employed would need to submit financial statements. All FNB clients can email [email protected] if they wish to apply or enquire about making repayment arrangements. Nedbank  Nedbank is offering clients “individual solutions to cashflow challenges” due to the coronavirus, which includes halting debt repayments (or part thereof) for a “suitable” period. Alternatively, clients loan periods may be extended or they could get more credit to manage short term cashflow shortfalls. Contact  Nedbank Home Loans on 0860 553  573. However, due to high call volumes, clients are encouraged to e-mailHLCollections@ Nedbank.co.za  for assistance. Should clients want to enquire about a Moratorium/Payment Holiday, they are able to e-mail  [email protected]  for assistance. SA Real Estate Investor Magazine MAY/JUNE 2020 9