HEIBERG ESTATES NEWSLETTER: JULY 2021
Dear Property Partners
Who could have guessed a mere month ago that our rainbow nation would have to face this current, heart breaking state of affairs where the culture of corruption, little respect for human life coupled with lawlessness, would have deteriorated to a point of almost no return……? The damage that the latest spate of events has caused not only to human life, our infrastructure, and the destruction of properties over a broad front, but to investment trust that our economy now needs more than ever before – both locally and internationally – is unmeasurable that will take years to restore. If ever. An estimated 150 000 job losses caused by a six-day lawlessness madness – where in this economy and with Covid-19 causing havoc across the whole spectrum are these people and families ever going to find work again? The ripple effect already visible in our property market, especially in our commercial market segment. Already developers of both residential- as well as commercial properties, are telling us that huge development projects in the pipeline have immediately been put on hold.
In property related discussions, it is evident that people are re-considering their options to invest locally versus diversifying and considering investing in seemingly more safe property and other overseas investment opportunities for the time being. However, our nation has faced many challenges before and together we shall conquer the latest once again, but we all area aware this will take time as this indeed is a huge mountain to climb, coupled with our present growing political and economic-insecurities and with Covid-19 also playing its role in the unprecedent turmoil our fragile country is facing. At least there were some relief that in order to combat rising inflation, fortunately the SA Reserve Bank didn’t increase as expected by many leading economists, the repo rate and left it unchanged at 3,5%.
Some of the latest interesting property facts and statistics, as follows:
- Fortunately, the time to sell a residential property, is on the decrease and a recent report by FNB points out that where the average time to sell 2 years ago during the middle of 2018 was 17 weeks and six days, it is now 8 weeks and two days.
- Interesting to note that the popularity pendulum is swinging back to full title properties, where it offers more space for work-and-live from home as needed with changing circumstances due to Covid-19.
- Looking at sectional title properties being very popular with first time buyers, sales are still on the increase. During May last year sectional title properties made out 25,3% of all property sales but increased to 27,7% as recorded in February this year whilst at the Atlantic Seaboard, it represented 80% of all sales.
- The most property sales activities were in the price ranges R800 000 to R1,5m with 27,1% of all sales recorded during the second quarter this year in this price range.
- According to Lightstone, the price of sectional title units increased by 5% year-to-date, reflecting the huge demand especially amongst first time buyers, motivated by our continued low interest rates.
- Semigration to our coastal and rural areas are continuous, with especially Covid-19 circumstances dictating work-and-life from home on the increase and an official corporate environment, becoming less important and necessary for many business entities forced to scale down.
- With the new work-and-life trend and people needing bigger properties, the average sales price of bigger properties is on the increase as seen during the second quarter with a 16.3% increase recorded, compared to Q2 2020.
- Empty standing rental properties are still a huge headache for concerned homeowners where vacancies towards the end of last year was 12,9%, versus the 13,15% recorded for the second quarter this year and lower yields achievable to keep existing tenants from moving out.
- Office rentals dropped by 10% in Cape Town and by 7% in Johannesburg whilst the national decentralised office vacancy rate was close to 14% as recorded during the second quarter this year.
- A recent FNB reports shows a decline in buy-to-let properties and that only about 10% of property sales during the first quarter this year, were investors in the buy-to-let market whilst e.g., during the bloom period of 2008 it was around 20%.
The short- and long-term repercussions of the looting and burning events still must play itself out over our whole economic- and political spectrum with the compound effect thereof, putting a huge lid on our much-needed economic recovery and growth. The bottom line amidst all these onslaughts of recent times on so many fronts on our young democracy, is that we shall again rise to the challenge and take hands across all borders in order to focus on what is important to survive as a Rainbow Nation.
We all are aware that renewed efforts need to be implemented to continue on the path of meaningful and sustainable positive changes for our country and all its people – but especially in creating sustainable jobs and enhancing fundamental standards of living across the board. We need to get creative, reinvent and stimulate our economy and especially in our property sector, change the normal way of thinking and doing in order to stimulate and create new opportunities and work. The latest macro-environmental state of affairs will have a huge impact on our commercial real estate sector and economy for years to come as we all know that business is one of the most important stimulators in creating new and sustainable jobs and also consequently, the demand for property. For the immediate future, demand should still remain in place for well-priced properties, driven by our continued low 7% interest rate, price competitiveness and lots of stock available.
We all at Heiberg Estates wish you well, be safe be healthy and warm in this most challenging of times and don’t hesitate to call us 24/7 for any property related needs or enquiries! Please keep in touch and visit our website on www.heibergestates.com or click your phone camera on the QR Code for instant access to view photos and videos of our properties to rent or for sale.
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Bambie & Heiberg Estates Team