Property sales down 40%, and that was before lockdown

No quick recovery as outbreak will ‘amplify already weakening trends’ in SA’s housing market.
And now a sharp drop in transaction volumes is expected as buyers delay their purchasing decisions until the uncertainty lifts. Image: Shutterstock

Preliminary Deeds Office data from the March FNB Property Barometer shows that transaction volumes in the residential property market declined by an estimated 40% year on year in the first quarter. Re/Max, citing Lightstone Property data, says there has been a 10.5% decrease in transfers over the same period.

Decline in transaction volumes

This obviously largely covers the period before the countrywide lockdown was instituted on March 27.

With the Deeds Office and municipalities effectively shut, no transfers will take place in April.

While it is unlikely that a typical volume of sales will have been agreed in April, it is anticipated that the backlog caused by the lockdown may take months to clear, given that expired rates clearance certificates will require transfers to be relodged. This suggests the decline in the second quarter may be greater.

The bank expects “a sharp drop in transaction volumes, as buyers delay their purchasing decisions until the uncertainty lifts”.

“To put this into context, says FNB, “transaction volumes in China at the height of lockdown declined in excess of 90% y/y, before recovering as lockdown restrictions were lifted. While aggressive cuts in interest rates will eventually assist home purchasing activity, in the short term this will likely be outweighed by heightened uncertainty due to Covid-19 and second-round effects on the labour market”.

FNB expects a 4.5% contraction in GDP this year, which it cautions “will likely change as new data becomes available”. Other economists foresee a contraction of closer to 10%.

Job losses are estimated by FNB to be at least 360 000, which is on the lower end of multiple other forecasts which already see this number in excess of 1 million.

“For the property market, this will mean material pressure on demand and, by extension, the supply of mortgages and, ultimately, weakened house prices.”

It points to a reduction in supply as anecdotal evidence suggests spooked sellers have taken their homes off the market.

The lockdown has depressed already low levels of buyer interest because of the restrictions on movement.

Weekly web searches decline, but recovering

The bank’s economics unit has used web traffic to property portals to proxy interest so far this year, and notes that this “has reduced significantly since the first local case of Covid-19″.

“It is interesting to note that while the reaction in South Africa lagged behind the rest of the world, the decline in ‘for sale’ web searches was relatively sharper.”

Weekly web searches vs world

After Covid-19?

But there has been a rebound in web traffic since the lockdown started (which it highlights is a worldwide phenomenon).

“While too early to definitively draw conclusions, this could be an early indication of burgeoning bargain hunting by investor buyers and/or pent-up demand from first-time buyers looking to capitalise on potential distressed selling,” says FNB.

It says “empirical evidence suggests that pandemics tend to have a sharp but short-lived impact on property markets, and that volumes tend to suffer more than prices”. In developed countries like the US and UK, reports have implied that Covid-19 will have a “similar impact”.

But these countries are not directly comparable to South Africa. “Notwithstanding prospects for further interest rates reduction, the uninspiring employment outlook effectively limits any prospects for [any] pent-up demand in SA.” FNB emphasises that “weakening trends in SA’s housing markets were already underway, and that the virus outbreak will only amplify them”.

Pullback in supply and demand

“Looking ahead, we expect Covid-19 to have a sharp but short-lived impact on SA’s housing market. We expect that transaction volumes will, in the short term, take a bigger hit relative to prices. In contrast to international housing markets, however, the overall recovery in SA will likely be drawn out due to pre-existing weakness in consumer fundamentals.”

FNB’s House Price Index slowed to 2.8% year on year in March, which is “the lowest point since May 2011 (ie. in close to nine years)”. This takes the average house price growth to 3.1% in the first quarter, from 3.5% in the fourth quarter of last year.

After inflation, house price growth is negative and has been for some time. The bank’s market strength index shows that “the higher end market remains in excess supply, while the bottom end is still in structural supply-deficit”.

“We expect these dynamics to play a crucial role in determining house price paths this year.”



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The ANC are simply incapable of exercising common sense.If they were they would be able to determine that EWC is the biggest deterrent to people investing their hard earned money into property with no guaranteed security. The NDR and appeasing their commie and unionist partners is far more important than something as trivial as the country’s economy. With the interest rate as low as it is the property market would explode if EWC was scrapped. Can somebody not explain this to the ANC in simple terms. The transfer duties that would accrue to SARS,to the benefit of the same ignorant ANC, would be astronomical. Bond repayments would be 50% or even less than a few years ago at the current interest rate, making property investment the best way working class people could invest their money..

The faction that lost at the ANC Nasrec Conference dropped this EWC hand grenade in Cyril Rapaphosa’s lap out of spitefulness. The ANC cut off its nose to spite its face. The “hooligan faction” in the ANC uses EWC to get back at the “noble faction”. This is an example of the competition that inevitably erupts in all socialist organisations. Whereas competition in the free-market structure benefits and motivates capital formation, competition in the socialist dispensation destroys capital formation.

The state of our economy, the levels of unemployment and the health of the property market are merely manifestations of the ANC mindset.

EWC is an issue, but there are larger issues that act negatively on property values and the market. According to the title deed, we own the property, but according to the revenue stream from that property, the government owns that property. The redistributive municipal rates and taxes regime is a coercive force that transforms the value of our property into salaries at municipalities and to services in townships. The capital appreciation is taxed, and eventually, we pay estate duties to the government. The title deed says we should pay for the maintenance of the house and the garden. We pay the instalments on the house, but in effect, that house belongs to the government.

Relatively speaking, EWC will be a blessing. And I assure you, the ANC does not want to bless us!

as with the amendment of the Mineral Rights Act, the new NHI, the phasing out of private security firms (vs Police), of private education (vs State), using pension funds, EWC is only the next step in ensuring stripping citizens of all rights & ownership and in securing the ANC State as the custodian over everything you do & own. PW Botha warned us against the “Rooi Gevaar”, but at that stage everybody thought he was mad.

FNB too optimistic. We are entering a global recession and slowdown of economic activity. In light of the economic uncertainty people will be reluctant to purchase big ticket items like cars and houses. Job security will be the lowest in decades. Sorry FNB, demand for houses and house prices will remain subdued and low interest rates will not be the savior this time.

South Africa is entering a Depression.

Where property prices was relatively resilient during the Great Depression in the US we will not have the luxury and it will deflate further with everything else.

Here is my take on living in SA and property:

1. Body corporates/estate managers are a ripoff!
2. Failed municipalities are a ripoff!
3. Eskom is a ripoff!
4. Banks are ripoff especially when canceling a bond!
5. Transfer duties and general taxes – RIPOFFF!
6. Forking out 5% + VAT to estate agents – RIPOFF!


Couldn’t have said this better myself.

Can’t wait to see how crooked estate agents spin this one


Agreed with some of your views, but there are way’s to mitigate, as we all need to stay somewhere ..
1.Bodycorporate…totally agree no argument there
2.Municipalities a rip off agree
3.Eskom, do your own thing ….my consumption only 4 kwh /day…i have a small hybrid PV system, payback 3 years …each time they put up prices i capex my consumption even lower…gas stoves/gas geysers/double glazing/proper ceilings important to achieve this.
4. Transfer duties…. buy the stand, build your own house, transfer duties only on the stand
6. Estate agents fee’s…Property 24, private adds, 100 % similar outcome, cost NIL

How do you porpose Selling a Property that the ANC intend to expropriate at no cost in the Future ?

Been in the property market for 20+ years. The market has taken a hiding due to a lack of confidence. Confidence is what drives any market, value and activity. Around the 1-5-2.5mil bracket there was some activity. In that price bracket you either rent or buy, it’s the same thing. You probably are also not looking at leaving SA.
Now above that bracket, there are options abroad, both for your and your families future, and price wise/investment wise.
This was before Corona.

I’m guessing sanitizing will be part of the requirements for sale going forward, perhaps a certificate of coronavirus?

the rates and taxes base of property valuations was changed from municipality value to market value some years ago – would like to see if my property’s rates and taxes is also adjusted downwards if the property market is now lower than 4 years ago

Is this not a pricing issue? If one plots a basket of residential, commercial and industrial prices over time, perhaps the prices just got ahead of rational levels? That is certainly true in Cape CBD prices. R25k/sqm is the new R45k/sqm. Property 2021 will introduce investors to more sane yields – 1% pm of value measured gross rental after rates & taxes & insurance & maintenance.

End of comments.



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