The middle of a pandemic may not feel like a natural time for a property uptick, but real estate agents around the country are reporting record sales since lockdown restrictions were lifted, says Tony Clarke, MD of the Rawson Property Group.
According to to Clarke, the surge in activity is due to a series of recent events, including the current interest rate – which is helping investment conditions.
With the prime interest rate now at 7%, a 100% bond on a R1 million property could cost R7,753 per month – over R1,700 less than in January this year. This brings it within the affordability range of buyers earning around R26,000 (gross) per month. However, Clarke cautioned buyers against extending themselves to limits of their personal finances.
“Now is an excellent time to buy, but it’s not the time to push the boundaries of affordability,” he said. “Our economy is under extreme pressure and job security is low – it would be much smarter to use this time to buy low and pay off debt faster than to push your limits and risk losing it all if your finances take an unexpected knock.”
Despite advising buyers against purchasing at the maximum of their affordability, Clarke said interest rates, at least, are unlikely to climb rapidly any time soon.
“Investors can rest assured that the favourable finance conditions are likely to stay for a while,” he said.
“Lowering interest rates has been an essential step for our government to stimulate economic growth after the extreme effects of the coronavirus on our economy and unemployment rates. Unfortunately, growth and recovery will be slow, but the silver lining of that for investors is that interest rates are unlikely to start climbing again any time soon.”
While conditions for buyers may be optimal, Clarke said sellers are finding the market a little more challenging, making professional assistance more important than ever for a favourable sale.
“Buyer activity is picking up, but the process of making a sale has become different,” said Clarke. “Professional quality photographs paired with detailed and evocative descriptions are still essential for online listings, but the virtual experience now has to go at least one step further.
“3D tours and virtual show houses are replacing ‘open house Sundays’ for health and safety reasons. Without these services, sellers are going to struggle to capture buyers’ attention.”
“Sales strategy is essential these days,” he said. “You can’t just list a property and hope for the best. You need to maximise online exposure, and then have a plan in place for converting casual interest into actual buyer enquiries.
“How you do this varies depending on property type, condition, location and price point. It’s not something I’d advise your average homeowner to attempt on their own under the best of circumstances, let alone the challenging market conditions we have today,” he said.
As for whether favourable sales are still happening, Clarke said as long as the price is right, the buyers are willing.
“The most important thing is not to overprice your property,” he said. “Remember, just because your home may not have appreciated as much as normal in the last year or so doesn’t mean you’re going to make a loss on your sale. If you’ve owned property for a reasonable period of time, the average growth will still be positive, even if today’s listing price isn’t quite what you hoped for.”