Life with Coronavirus: how will house prices and buying patterns be affected?
Category News
The Coronavirus lockdown and related actions will have two major effects on the SA residential market says Rowan Alexander, Director of Alexander Swart Property, the Cape Town estate agency: it will knock house prices - but not too drastically - and it will alter buying patterns.
He says fears that it will cause a price meltdown in the residential market similar to that of 2008, are however unfounded despite the extension of the lockdown period.
"In 2008 it was over-borrowing and irresponsible lending by banks to speculators in this sector, which actually caused the financial collapse. Now housing, although affected by the current situation, is not central to the problem. We will obviously see less demand and price reductions as the economy slows down further but I do not see the residential market collapsing. I predict that in the year ahead or longer, the majority buyers will be a great deal more cautious than previously and I think we can expect the pace of sales to slow down considerably. Higher priced homes will in the next year or two, probably be brought to the market at noticeably lower prices than we have seen for some time but I do not foresee the average home price dropping drastically. The banks, who learned the hard way what reckless lending can do, will continue to be fairly conservative, probably requiring bigger deposits and in some cases additional security. Millennials and even younger buyers who have grown up unafraid of high debt will find that loan conditions are more stringent. I am of the opinion that we will generally see a return to the traditional, more cautious attitude adopted by older middle class people towards borrowing."
In the coming year and thereafter, says Alexander, the main buying focus will be on lower priced housing; homes selling below R2, 5 million. The proportion of First Time Home Buyers will continue to grow and the sub-R1 million market will be much in demand.
Alexander comments that the lockdown period is bound to lead to a reappraisal of lifestyles and a redesign of homes to cope with the rapid increase in work-at-home buyers. Until now the work areas at homes were often in cramped out-of-the-way spaces, not much valued by the family. Lockdown is showing that it is possible for many more staff members to work from home. Work spaces are likely to be seen as among the most important in homes in the future and redesigns will involve bigger areas which are better equipped to cope with electronic communication methods, more sunshine and possibly also better views.
"What Alexander Swart is learning from this challenging Covid-19 period is that in our business, agents can still be effective and efficient while working from home. With the correct online training we were able adapt to 21st century communication methods, even though we were initially reluctant to do so."
Alexander added that those interested in knowing their views on the Coronavirus situation, the current economy and what ASPG is doing about it all, should view their recent press statements and website, as well as social media and facebook comments. These, although wholly realistic, show that a forward looking estate agency can cope with this crisis.
For further information, please contact Rowan Alexander on 082 581 3116 or by email: rowan@asproperty.co.za
Author: Rowan Alexander
