HEIBERG ESTATES NEWSLETTER: OCTOBER 2021

Dear Property Partners

With Pretoria showcasing its Jacarandas in its full glory, everywhere you go the festive purple lined streets revitalize your energy for the last stretch of yet another challenging year. The impact of Covid-19 still visible over every sector of our SA Real Estate Market.

Yes, financial pressures are gradually ceasing, but the pace of recovering is still moderate whilst the initial uptick in real estate market activities, is without doubt slowing down again. General property investment sentiment remains to be cautious with so many businesses that had taken a further huge financial knock with Covid-19, whilst already being in the midst of a recession when it broke out.

Also interesting to note that over the past decade a definite decline in property cash sales, has been taking place. On the other hand and with our continued low interest rate, the number of residential property sales that were financed through mortgages, was recorded at a historic high of 72%. Further illustrating how under pressure our real estate market has been for the past almost 10 years, is the visible drop in residential sales which has declined by almost 50% compared to the property boom decade between the years 2000 to 2009. The decline in the total number of property sales last year was recorded at 15%.

Some of the latest interesting property facts and statistics, as follows:

• It is recognized that the volume of mortgages is an indicator of economic stability. The TPN Credit Buro reports that before Covid-19 an average of 165 000 mortgages were granted each year. During the financial crisis of 2009 this declined to 140 000 with similar declines noted in 2020 – BUT, during 2009 only 40% of credit applications were rejected versus the 67,4% recorded rejections during the second quarter 2020. This clearly illustrating the negative impact of Covid-19 and its ripple effect throughout our property market.
• An average of 250 000 to 270 000 of property sales transfers take place every year looking at roughly the past 10 years – last year this figure declined to 199 000.
• A recent report by Lightstone points out the continuous interest for coastal properties becoming more and more popular with the new trend of working from home. Semigration is especially visible under people moving from Gauteng to the coast for a coastal lifestyle where the remote working place is not a problem anymore.
• Landlord’s are breathing again with the rental market segment gradually picking up and gaining momentum. Also interesting to note that increasingly, many rental property seekers are renting together with family members/friends and splitting costs in the process. Properties offering a separate or private office wing, growing in demand.
• During last year’s hard lockdown, only 89% of financial stressed consumers managed to do their monthly bond repayments on time, whilst only 73.5% of tenants were in good standing to pay their monthly rentals during the hard lockdown. Fortunately these figures are on the increase again.
• Looking at our Commercial Markets that in general has been stagnating for the past few years, there remain to be an oversupply of properties across all sectors in specific referral to Retail, Industrial and Office properties for sale with also increased time periods before properties get sold successfully. This continuing trend putting further downwards pressure on prices.
• Our Office market remains to be the most oversupplied, this also due to the way that the traditional office environment has been changed forever with Covid-19 with remote working increasing on an ongoing basis and where the office environment is not the center of our work day anymore. The preference for fully encompassing “fully serviced office space”, is on the increase with more corporate institutions offering their people to work from home but still providing a central and productive office “HQ” from where staff and clients can meet when and as needed.
• Industrial Properties are still performing the best in the Commercial Property Market segment. It is expected that this pressure on our Commercial markets will continue for considerable time with so little visible on the horizon to stimulate our economy and job creation.
• The total value of residential property transfers in SA during the first half of this year (R113 billion) was 35.4% higher than recorded during the first half of 2019 and with 114 000 properties sold as recorded by Lightstone – this demonstrates the robust improvement in activities from pre-Covid levels.

More than half the debt owed by South Africans, is due to funding home ownership with mortgages. With holiday payments granted by our financial institutions rapidly coming to an end, it is obvious that our economy desperately need more jobs and that we need to broaden our tax base as we all are aware hardly anything is left in our state coffers to provide and expand infrastructure and job creation.

In general we can report that there has been a growing cautious approach to property during these challenging times as well as with the compounding effect of Covid-19, furthermore also with weak business confidence and little appetited for new ventures that has been increased with the heart breaking July riots.

There is a visible growing “wait-and-see” sentiment amongst both Sellers as well as Buyers as we urgently await stability and economic growth with new sustainable job creation. House price increases is losing momentum once again with economic growth that slowed down during the last quarter, whilst the gap between buying and selling sentiment is on the decrease with demand moderating, all of this stimulating the Buyers’ Market!

Once again our real estate scenario remains to be an exciting Buyers Market with an oversupply to pick and choose from at excellent prices, offering excellent investment opportunities! After all, we all need a roof over our heads. With continued and favorable low interest rates, the average deposit requirement and supported by many financial institutions, has decreased to around 8.75% of the purchase price – the lowest since 2007. So don’t miss excellent opportunities to invest in properties or buy your dream home at prices for many years not seen! Please visit our website with videos and photographs at www.heibergestates.com

Looking forward to meet with you and be assured that the Heiberg Estates Team, whether you are selling, buying or renting across our property sector, is there to serve you with dedication and more than 50 years of collective expertise. Please call us 24/7 at 083 654 3773.

SCAN (put your phone on camera and press white button) TO GO TO OUR WEBSITE:

Please contact our Heiberg Estates Team that remain to be on 24/7 standby for you whether you want to sell, buy or rent!

With warm regards

Yours faithfully

Bambie & Heiberg Estates Team