FNB report bears out statements made by Alexander Swart director
Category News
The latest FNB Property Barometer corroborates many of the statements made over the last year by Rowan Alexander, Director of Alexander Swart Properties, the Cape Town estate agency which focuses on the city's Northern Suburbs, although also active elsewhere.
In particular, the FNB report corroborates Alexander's previous statement that, despite the Covid pandemic, the residential property sector is still capable of "ploughing its own furrow" semi-independently of the SA economy and is performing better than most economists predicted : the FNB report reveals that a measure of "decoupling" has taken place and annualised property prices in February were 4,2% up ( from 3,9% in January) although the economy is struggling as never before.
The report also confirms Alexander's prediction made early last year that interest rates would fall and that this would lead to a mini-boom in house sales, especially in the R800 000 to R1,8 million bracket. Here, says FNB, there has been a marked influx of former tenants now seeking to become home owners - a trend already commented on by Alexander.
FNB warns, however, that this demand is now tapering off and that a more normal market will come into operation-again a trend predicted by Alexander. It also indicates that the upper middle and upper sector market (in Alexander's view, houses priced from R4,5 million upwards) will see more losses of up to 30% and this situation is likely to continue, with greatly increased downscaling persisting for at least a year. However, the report shows that there has been a demand for bigger homes that enable employers to use them as work areas and increase the work space allocated to those using them, thereby complying with Covid 19 safety recommendations. The increased call for this type of facility was predicted by Alexander in mid-2020.
Again confirming Alexander's earlier analyses, the FNB report says that the rental market is now under pressure. Alexander says that vacancies are now up to 35% in parts of Cape Town and regular escalations in rents are now no longer possible. In addition a significant amount of rental stock is now on the market to be sold. Alexander had predicted that this would be the case as a result of the swing to home ownership brought about by the very low interest rates and the current highly insecure labour market conditions. The FNB report, in fact, shows that severe job losses among the unskilled and semi-skilled have now slowed down and employment here is picking up BUT in the white collar professional and office sector, job losses have been on the up and up : in the fourth quarter of 2020 66 000 "professionals" lost their jobs and there is as yet no sign of a recovery here. As he has said before Alexander advises landlords of rented property in times like the present to make every effort to hold onto good, regular paying tenants and not expect ongoing rent rises of the size previously expected.
Another trend highlighted by FNB on which Alexander has commented several times is the greatly increased adaptability of the lending institutions to accommodate hard pressed bond holders and applicants, even in some cases granting lengthy payment holidays. The willingness of the banks to "play ball", said Alexander, should encourage potential borrowers to get into the home owning market asap.
Alexander has confirmed that Alexander Swart have maintained sales at their second half of 2020 levels, although the FNB report says that only 37% of estate agents expect to reach 4Q20 sales levels this year. ASP's success, says Alexander, is due not only to the fact that they have a "tried and tested" team but also because, as FNB have shown, demand for the middle-lower and middle bracket housing, where Alexander Swart is particularly strong, is a great deal better than many forecast, particularly in such key areas for Alexander Swart as Brackenfell, Kraaifontein and Durbanville.
For further information, please contact Rowan Alexander on email : rowan@aspg.co.za or by cellphone on 082 581 3116.
Author: Rowan Alexander
