Housing sales drop drastically due to Lockdown, urgent call to reclassify
After over a month in Lockdown, the economic impact of COVID-19 is no longer speculation at this point, but rather proven fact says RE/MAX of Southern Africa. As one of South Africa's largest Real Estate Agencies, the company has confirmed it is feeling the impact of the national Lockdown -recording an estimated 54% drop in registered sales.
“Our sales in the first three months were going well, with February 2020 alone yielding an 8% increase in reported sales compared to February of the previous year. By far the biggest drop we saw was in April, which was down by 62% when compared to April 2019,” explains Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
'Registered sales drop by 54%'
When looking at our registered sales, the impact of the Lockdown becomes even more apparent. “In January, February, and March, we saw a 27%, 4%, and 5% increase YoY respectively from last year. However, in April, registered sales dropped by 54%,” says Goslett.
Goslett warns that there will be a knock-on effect on the property market long after the Lockdown is lifted.
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Even the darkest cloud has a silver lining and, in this instance, it’s the rare combination of a record low repo rate and a very bearish market affording first-time buyers an excellent opportunity to get a foot in the market, and make a good investment if they keep their wits about them.
So says Claude McKirby, Co-Principal of Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs adding: “There hasn’t been a better time to enter the market for many years as investors are also spoilt for choice in every price band.”
“However, favourable market conditions don’t mitigate the potential pitfalls and, unfortunately, buyer’s remorse is not uncommon amongst first-time buyers, usually as a result of neglecting to do their homework and ensure they are thoroughly prepared,” says McKirby.
SA’s major banks on home loan approvals as Covid-19 Lockdown levels eased
Many South Africans are experiencing financial strain and while the processing and vetting of home loans are underway once more - banks are carefully assessing the ability of its customers to manage their debts going forward. South Africa is currently under lockdown Alert Level Four – after just over a month of Hard Lockdown, which ended on 1 May - as every sector of our economy has been shaken to the core by the Covid-19 Pandemic.
With the expectation that most of the country will be moving to Alert Level 3 before the end of May, the forecast for the rest of the year is a deep recession of -4.5% Gross Domestic Product contraction, significantly more severe than the -1.5% GDP contraction of 2009.
While another 25 basis points cut is forecast when the Reserve Bank meets this coming week on Thursday, 21 May, concern is being raised the industry cannot operate fully. Key stakeholders continue to lobby for reclassification of the restrictions that only allows residential real estate to operate full under Alert Level 2.