The last three months have been tumultuous, to say the least. Now that the economy has re-opened, South Africans wait with bated breath to see how long it will take before we can recover from the damage that this pandemic has inflicted upon our economy.
The housing market has been one of the hardest-hit industries during the lockdown. With the Deeds Office closure and real estate services being unable to operate, the over R20 billion industry came to standstill during Alert Level 5 and 4. However, according to heavyweights in the industry, the overall sentiment leans towards cautious optimism for a slow and steady recovery ahead.
“Understandably, our registered sales are at the lowest they’ve been since 2011. YTD, registered sales have dropped by 30% on the figures for the same period last year. YoY, April’s registered sales dropped by 54% and May’s sales dropped by 93%. Despite these challenging market conditions, our agent growth rate is the greatest it has been since 2016. We have grown by 89 agents since May 2019, 40 of which joined since January this year. While our competitors are threatening layoffs, our brand is growing stronger each day,” says Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett.
In terms of his predictions for the housing market going forward, Goslett believes that now that the economy is open, market activity is likely to pick up at a slow but steady pace.“According to our website traffic, we have seen a substantial increase in listing viewings in April and in May. Despite the increase in traffic, there has been a drop off in leads on our site (form fills, call me back requests, etc.) in March and April. However, in May, the number of leads generated from our website already returned to similar amounts as we saw in February before the lockdown began. This leads me to believe that the spike in listing views will soon turn into more leads and enquiries that result in more sales in the months to come,” says Goslett.
Similarly, there is a positive trend in terms of the number of home loan applications submitted through South Africa’s leading bond origination service, BetterBond. “Overall, the market seems to be performing better than anticipated. In April, when the lockdown started, the number of applications dropped by 68% YoY. In May, the number of applications only dropped by 32% YoY, which shows that consumer confidence has not been eroded despite the economic challenges the country is facing, and those wishing to capitalise on the market conditions will do so. This is a promising sign for market recovery post-lockdown,” says BetterBond CEO, Carl Coetzee.
“Overall, I am cautiously optimistic based on the intake stats we have seen in the past couple of weeks. The fact that the interest rate is the lowest in over 50 years and it is an extreme buyers’ market should contribute to consumer confidence for those who have a stable income and have been looking to purchase a home. In fact, 70% of our applications in May were submitted by first-time buyers. I predict that this market segment will become increasingly active as we emerge from this lockdown,” Coetzee predicts.
While optimistic about the future, both Goslett and Coetzee agree that there is a long road ahead before our economy bounces back to what it was before the lockdown. “Though we are encouraged to see some early signs of increased activity in the market, it is still a long journey ahead before the housing market fully recovers. Sellers will need to remain realistic about their asking price as demand is likely to remain low until we see greater recovery. Buyers are also advised to be extra cautious about their spending habits if they hope to secure bond approval, as it is likely that banks will tighten up their lending criteria over this time,” Goslett advises.
Most importantly, buyers and sellers are encouraged to lean on the support and advice of experts in the industry, such as property practitioners and bond originators. “The expert advice of these professional services could end up saving homeowners hundreds of thousands of Rands on either the asking price or on interest charges. This is money homeowners cannot afford to lose, especially not within the current economy,” Goslett concludes.