As South Africa approaches level 3 lockdown on Monday 1 June, the official announcement that real estate will be allowed to operate is being hailed from all quarters of the industry as a particularly positive step, says Carl Coetzee, BetterBond chief executive officer.
Initial indications that the real estate sector would only be able to operate at level 2 had the industry deeply concerned, and many groups lobbying the government to review the status quo, he said.
Not only does property contribute significantly to GDP – deeds offices processed R147 billion on mortgage registrations in 2019 – it also employs close to 100,000 people, both directly and indirectly.
As such, the opening of the property sector is a necessary step to restart the economy and protect the livelihood of thousands, said Coetzee.
“We are confident and optimistic about putting all the necessary health and safety measures in place – not only to provide peace of mind to all concerned, but also to reinstate trust in our industry, and demonstrate our commitment to making a meaningful and constructive contribution to restarting the economy.”
Coetzee said that the opening of the property sector is particularly good news for buyers and investors, as the prevailing market conditions are geared to favour residential property buyers.
“With interest rates at 50-year lows, and the threshold on transfer duty raised to R1 million earlier this year, upfront expenses when purchasing a property are lower, making it a buyer’s market for sure.
“These conditions also present an opportunity for long-term tenants wanting to own their own homes to enter the property market as it’s now more affordable to do so than it has been for decades.”
While it’s too early to comment on consumer confidence and overall sentiment around property, the number of bond applications received this month (May 2020) by the BetterLife Group, the holding company for BetterBond, compared to the number of applications received in April 2020, are telling, Coetzee said.
April saw a 70% drop in applications from February and March, and of the deals concluded up to 60% were conditional on viewing the property before the transaction would be concluded.
By mid-May though applications were approaching 70% of what they were a year ago, which is promising for the sector and the various role players in the value chain.
“What’s more, this is a clear indication of renewed interest in the industry, which bodes well for the property market and the economy at large,” said Coetzee.
“The opening of the property sector does not mean the Covid-19 threat is contained, however, and we remain steadfastly committed to the safety and wellbeing of our clients, our staff, our suppliers and our industry as our foremost priority,” said Coetzee.
A functioning property sector is central to unlocking income and liquidity for a whole host of role players along the entire value chain.
These include, but are not limited to, banks and bond originators, property developers, real estate agents and conveyancing attorneys, the property finance expert said.