Applying for a bond in 2021 is 'going to get tougher'
With some R5bn worth of income tax increases expected to be announced in February, and the possibility of wide-scale retrenchment a reality this year, banks can be expected to tighten their bond approval rates. But prospective buyers would do well to go in low and pay off their debt as soon as possible - here's what the experts forecast as we head into 2021.
The residential property market is expected to start losing some of its 2020 momentum soon, even though inflation is likely to remain depressed by a number of factors and the Reserve Bank is likely to keep interest rates low until at least 2022.
Berry Everitt, CEO of the Chas Everitt International property group, says the biggest market obstacle in 2021 will be a predicted increase in SA’s already very high unemployment rate in the wake of the Covid-19 pandemic.
“Especially worrying is the unusually high number of the middle- to upper-income consumers who are usually better insulated against economic shocks but are currently struggling to make ends meet as a result of pandemic-related retrenchments and company closures.
Buying a home under Alert Level 3 | 'No delays expected'
Although SA is back under Alert Level 3 lockdown, prospective home buyers and tenants are still able to view properties that are for sale or to let, provided they follow certain protocols designed to prevent the spread of Covid-19.
Home sellers, buyers, landlords and tenants, mortgage originators, property attorneys nor the deeds offices are not limited by the amended Alert Level 3 South Africa now finds itself in.
Estate and rental agents will continue to be fully available for home valuations, listings and viewings.
“Most of the Deeds offices around the country are set to re-open next week so we do not expect any untoward delays in property transfers," says Berry Everitt, CEO of the Chas Everitt International property group.
“Clearly President Ramaphosa and the government would like to keep as much of the economy as possible up and running at this time, and because the real estate industry has just kept operating under the first set of Level 3 protocols that were put in place back in June, it is recognized as a very low-risk sector in terms of the Covid-19 second wave."
What buyers need to know about purchasing a distressed property
The unfortunate reality is that there has been an increase in the number of distressed property sales owing to the lockdown and a rising unemployment rate. While interest rate cuts provided a ‘massive stimulus’ to the market, demand has slowed as signs of consumer distress start filtering through.
"We’re going to see a lot of keenly-priced properties coming into play in the coming months, which makes getting your price right even more critical. Last year, 14% of our sales were due to emigration – and if we add the expected wave of distressed properties coming onto the market, this will drive prices down even further, as the buyer pool will not be able to sustain those levels,” says Lloyd Hobson, national sales manager of tech-enabled real estate agency, Leadhome.
Some of these properties will require a bit of work before they can be transformed into happily-ever-after homes, but they do provide cash-strapped buyers with the opportunity to enter the property market while rescuing the sellers from their debt.
How to negotiate your rental (and avoid eviction)
The year 2020 certainly showed us that life does not always go according to plan. Even more so within the rental market. The financial impact of the Covid-19 pandemic has many good-quality tenants finding themselves under unexpected financial pressure.
'Affordability is vital when renegotiating'
The rental market has seen a high level of vacancies as the average South African deals with the economic impact of Covid-19. TPN Rental Data for Q3 highlights the hardest-hit sectors with soaring vacancies are the properties at the low-end, rentals
With South Africa under Level 3 restrictions up until 15 January 2021, no evictions can be executed. However, eviction orders can be applied for and processed. According to section 37, no person may be evicted for the duration of the alert level, unless under the appropriate court grants the necessary order. South African courts are in recess up until 7 January.