As we draw a close to the third quarter of 2021, the effects of the third wave of COVID-19 infections combined with recent political unrest are sure to be felt across most sectors of the South African economy. The question is whether this will have an impact on the local housing market.
Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, says that he expects activity within the local housing market to level out in response to the challenging economic circumstances that lie before us.
“When unemployment increases, spending power declines and fewer buyers can afford to purchase property. This translates into a buyers’ market where the supply of properties outweighs the demand from buyers. Those whose salaries are affected might become unable to afford the costs of their home loan, which will mean that more properties will enter the market, with some falling claim to bank repossession and distressed property sales. In time, this can put downward pressure on asking prices,” says Goslett.
The hope is that vaccination rates will increase soon, as this should prevent any further restrictions on economic activity and allow for a period of recovery. “Provided that the economy is allowed to operate without any further restrictions, it is possible for the economy to begin its gradual recovery and for the downside risks to the local housing market to be contained,” Goslett postulates.
While unable to predict if and when the property market will be affected by the current economic conditions, Goslett remains optimistic about real estate as an investment vehicle. “Despite our current economic outlook, our network recorded an increase of 54% in reported sales. And, while I know that the property market is unlikely to remain this active forever, this does paint a promising picture that the demand for property exists even within a struggling economy.”
Goslett advises homeowners to keep an ear to the ground over the next few months to remain aware of any changes in the outlook for both the economy as well as the local property market. “For a deeper understanding on how your local housing market is performing within the current economy, reach out to your nearest real estate agency and arrange an appointment. Each suburb will have its own unique micro-trends that might differ from the trends that emerge within the broader housing market. Chatting to a local real estate professional can shed some light on these unique trends and keep homeowners better informed on the state of their given market. This will help them make better decisions around how best to manage their real estate investments,” Goslett concludes.
