NOMPU SIZIBA: The property sector had a tough time in the early part of the Covid-19-related lockdown period last year, but certain segments of the property sector did improve substantially as the year progressed. Lightstone Property released a survey showing that only 51% of estate agents managed to achieve their sales targets. They also made other observations about the industry.
To tell us more I’m joined on the line by Esteani Marx, the head of real estate at Lightstone Property. Thank you so much for joining us, Esteani. Now, in your analysis of how estate agents fared in 2020, you indicate that just 51% of them managed to meet their sales targets. Of course we know that that was a year full of a number of obstacles for the industry and others. Just remind us of the practical challenges the sector faced, and what sort of progress has been made since.
ESTEANI MARX: Hi Nompu. It’s great to be great to be here. We all know that in March last year we started to see some Covid cases entering the country, and from April and May we were in full lockdown. That also affected the real estate market in that none of the transactions could have taken place and sales couldn’t take place. People couldn’t go and view properties, properties couldn’t be listed, so the entire value chain was actually affected by Covid. I think that that greatly contributed to many of the estate agents not making their targets because for two months they couldn’t be out in the field.
However, I think it is one of the industries that has actually bounced back very well in that they got creative and they really found ways of interacting with their clients in a digital way. They did quite a lot in terms of automation of processes, and it’s interesting that we actually saw coming out of that that there was an increase in properties that had been purchased without having the property viewed physically by the buyer.
NOMPU SIZIBA: But presumably the estate agencies provided a way for people to digitally view the properties that they were interested in.
ESTEANI MARX: Correct. In many cases. I believe there were also instances where no viewing was done, not even digitally.
NOMPU SIZIBA: I would never do that!
ESTEANI MARX: I think in those instances it would have been twofold. The one [viewer] might be your investor and buyer, where they probably were very familiar with, let’s say, a personal scheme. So familiar with the layout, familiar with the unit inside. There I believe it could have been possible for buyers to buy without having a physical view of the property.
And then also I think there were a lot of conditions imposed in terms of buying with a digital viewing or no viewing, to say look, we are buying this property with the condition that we are able to go and have a viewing before the transaction is registered.
So yes, I believe that there would have been a lot of conditions imposed. But essentially it did bump up the digital world for real estate in that case, embracing the virtual viewings and the digital digitisation of the processes.
NOMPU SIZIBA: So, with the move to a more digital setup, how much did this affect jobs in the sector?
ESTEANI MARX: I think in the initial Covid period, being the first sort of six months of Covid last year, the majority of the jobs that were affected in the real estate market would have been your administration roles, because there were not as many deals coming through. They had a lot of, I’m going to say, obstacles to run through – the deeds offices and city councils. So there were a lot of obstacles, and I think that obviously curbed the number of registrations that went through, and administration roles were affected most.
I would rather say that digitisation would create jobs in the real estate world, because agencies need to adjust their systems and move into a more digital environment. So, if anything, it actually creates jobs to a certain extent. But it’s going to be interesting to see if that holds up going forward into the rest of this year.
NOMPU SIZIBA: How do you see that hybrid system working for estate agents – part office, part digital – because it’s difficult to try and imagine people going through a property-buying process without the touch and the feel, going to the neighbourhood and going to the house and all of that. How do you see that looking, going forward?
ESTEANI MARX: I agree with you. I think, again, for an investor-type buyer it would be fine, because they don’t necessarily have to live in the specific area or in the building or in those kind of situations whereas, as a purchaser or buyer with the intention of actually staying in the unit, I agree. You want to know the environment – if Covid is around, the traffic [situation] – there are a lot of factors that you’re going to be taking into consideration. So yes, digitisation maybe will reduce the number of properties that you go and see. Therefore a bit of cost saving will get you to, instead of seeing 10 properties, [only seeing five] because a virtual showcase has actually helped you to eliminate some of the options that you have. But, in my opinion, at least it would help the clients.
NOMPU SIZIBA: We’ve heard that there were parts of the property market, especially in the sub-R1.5 million area, that experienced positive activity levels with buyers also taking advantage of a lower interest-rate environment. Was that confirmed by estate agents in your survey, and is this something that you think will likely continue this year?
ESTEANI MARX: What we do see here is that there are a lot of factors that have contributed to the SA market which has bounced back quite significantly. Those factors include your interest-rate cut. You’re sitting on a 300 basis point interest-rate cut, which really means it could be up to a 15% expense saving in the household. So that in itself helped the property owners to upgrade in some instances towards the sort of high-value luxury market. That has also been driven by the work-from-home movement, or work-from-anywhere, as they say. As an example, let’s say, if you have a husband and a wife in a one-bedroom unit working from home it is quite difficult. I think that helped the drive towards the mid to very high luxury value segment, getting people into a more spacious environment for them to work from home.
But I think also, with the impact of job losses, [owners in] the higher luxury market actually had to retract a bit. So they may potentially have had to move to a smaller property, which then falls within the high value markets up to, let’s say, round about R1.5 million.
NOMPU SIZIBA: And then I’m going to ask you a quick question and need a quick answer. You do publish house-price forecasts. What’s the expectation for 2021?
ESTEANI MARX: There’s no quick answer because it’s difficult to predict. But with our three scenarios, the most likely or the middle scenario is we’re looking at about 4% based on certain factors. On the inside, it could also drop to around 2.1% with the negative economic growth we’ve seen. But it could also rise up to 5.2% if certain economic indicators are favourable in the SA market.
NOMPU SIZIBA: We’ll have to see how the variables all play out. Thank you so much, Esteani, for your time and insights there. Esteani Marx is the head of real estate at Lightstone Property.