“Notwithstanding the need for the country to be united in its response to the Coronavirus threat and the need to remain steadfast and positive in the belief that we will get through this immense challenge we are facing at a humanitarian level, there’s no doubt that while anticipated, South Africa’s downgrade to junk status by Moody’s rating agency will be a further blow to the already weakened economy, which has already slipped into recession and is only beginning to grapple with the ramifications of the Covid-19 lockdown,” says Dr Andrew Golding, chief executive of the Pam Golding Property group.
“While a negative development amid an already bleak situation, in a curious twist of fate it probably matters less now than it might have done, if it had occurred pre-Covid-19, as the entire globe is currently in entirely unchartered territory, with all economies taking significant strain.
“Furthermore,” says Dr Golding, “some commentators have pointed out that the market has already largely priced in the downgrade, including a call for a dramatic, further reduction in the interest rate in order to bolster the economy, particularly in the wake of the pandemic.
“Since the local property market is driven by sentiment, there are bound to be negative effects from the global pandemic, which are likely to remain over the medium to longer term unless whatever stimulus there is available to the economy is provided as a matter of urgency.
“There are still sellers and buyers in the market who are able and willing to transact and technology means that buyers - many of whom now have more available time than before - are able to browse neighbourhoods and properties, in many instances viewing virtual tours of homes while they weigh up all the options, taking into account information and advice on offer via reputable, experienced real estate agents.
“We believe that the high demand for accommodation experienced in the sub-R1 million price band, where no transfer duty is payable, will remain a meaningful contributor to activity in the housing market, as first-time and other buyers seek affordably priced homes.
“As the Deeds Office is currently closed, transactions underway can still be at least partially processed online, ready to be concluded once the lockdown is lifted.”
Adds Dr Golding: “Some positive news is that next month (April) the fuel price is set to drop by almost R2 per litre. The record drop in prices will provide relief to essential services which continue to operate during the lockdown, Eskom which relies on diesel to generate additional electricity and consumers, once they are able to commute freely once more.”