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Wednesday Sep 23, 2020

How Covid-19 has changed the SA property market

Lockdown restrictions may have eased, but life has still been altered by the effects of COVID-19. A few months outside of Alert Level 5 and 4 have allowed real estate professionals the opportunity to spot the emerging trends among property buyers and sellers during this tumultuous time.  

According to Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett, the property market has seen a boom over the last two months following a period of being unable to operate at Alert Levels 5 and 4. "But, despite having had record sales months of R2.4 billion and R3.3 billion in July and August respectively, our total sales figure year-to-date for August is still down by 9%. When broken down by region, the Free State and Northern Cape regions seem to be hit the hardest with a 17% drop in sales YTD. Least affected are the central Gauteng region as well as KZN, both of which reflect a 3% drop YTD," he states.

For a more detailed picture of how the local property market is performing, RE/MAX SA sent out a survey to their network. The majority of feedback received was that buyers are searching for a higher quality of life and are looking for homes with an at-home study space as well as an additional room or flatlet to allow for multi-generational living. While some report higher levels of sellers who are downsizing owing to affordability issues, other report no such increases within their market.   

Maurice Lodewick, Broker/Owner of RE/MAX Lifestyle Estates in Nelspruit, explains that since the lockdown occurred, buyers in his area are requesting more space and a home that offers a higher quality of life. "They want larger stands and some are still wanting small stands, but with views onto greenbelts or vast open space. There have also been more requests for studies, especially for studies that can accommodate more than one person. Beyond this, buyers are looking for outbuildings that can be converted to a school room or a flatlet to accommodate Granny."  

"In terms of our sellers, there has been a notable increase in those who are downsizing, with more than 50% of homeowners in our area selling because of affordability issues. This is occurring most often within the higher-upper market (above R5 million). Sellers in this price segment are looking to downscale to a home worth around R2.5 million," Lodewick explains.

Similarly, Deon de Swardt, Broker/Owner of RE/MAX Oaktree in Stellenbosch, explains that the price bracket above R5 million is very quiet. "Buyers in this price bracket are deciding rather to negotiate a two-year lease instead of buying. I suppose that this is owing to the uncertain times we are experiencing," he explains.

Beyond this, de Swardt notes that while in the past his office has dealt with a lot of buyers from Gauteng who are looking to relocate to the Boland region, this has dried up a bit among buyers within the R2.5 million price bracket and below. "It is as if the Garden Route region has become more attractive to these buyers. I think it has a lot to do with the value for money these areas offer."

Sharing these sentiments, Chris van der Merwe, Broker/Manager of RE/MAX Coastal, explains that while there has not been many who are downsizing due to financial pressure, his office has had an influx of buyers in Knysna, Sedgefield and Wilderness who are coming from the bigger metros like Johannesburg and Cape Town. "Many of these buyers are looking to work from home and commute between the city and coastal towns. We have experienced an increase in younger, professional couples and first-time buyers. More of our buyers are requiring a study or a home office space and also request if there is internet fibre installed. A high-quality lifestyle was the main concern for these buyers as well as safety," he notes.

Similarly, Barbara Larney, Broker/Owner of RE/MAX Town and Country in Hermanus, explains that many of her buyers feel cooped up in their current situation and want to explore what the country lifestyle has to offer. "Many are looking for a place where their children to be free to play outdoors safely. There has been a small wave of inquiries from Somerset West; mostly parents exploring Arabella and Benguela Estate before the new school year starts. There has also been an increase in interest in homes with a home office space and second living space, as well as an in-law suite or apartment attached to the house. Buyers in our area have a preference for high-tech homes, solar power features, and a sense of a community when buying in an estate," she explains.

In respect to sellers in this area, Larney states that some of her clients have been affected by the economic downturn due to the pandemic and are now forced to sell. "I know of a number of clients are merging households because of the tough economic situation. As assisted living costs are very expensive, our older clients are choosing to move in with their children and grandkids, combining the household by selling their homes and downscaling and building their own private in-law suite on one plot. Some of the European swallows are selling and moving back to Europe because nobody knows when South Africa might actually reopen its borders," she elaborates.

In conclusion, Goslett highlights that these are just some of the trends that have emerged over the last few months outside of hard lockdown restrictions. "These are such unique times which makes it difficult to predict what lies ahead. New trends are likely to continue to emerge as lockdown restrictions ease and financial relief funds run dry. That being said, I remain cautiously optimistic and predict that, at worst, the rest of the year will reflect similar volumes of activity as the previous year," Goslett concludes.

    
 

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