HEIBERG ESTATES: LOCKDOWN UPDATE MAY 2020

AT LEAST A SILVER LINING APPEARED TODAY!

NEWSLETTER UPDATE LOCKDOWN

Dear Property Partners

WE ARE MISSING YOU! HEREWITH A GENERAL OVERSIGHT OF COVID-19 IMPACT ON OUR PROPERTY MARKET AS WELL AS SOME GOOD NEWS!

This rather early monthly Heiberg Estates May Newsletter to you – our much valued and respected Property Partners, Friends and Colleagues – is sent with the main reason to tell you that we all at Heiberg Estates are truly missing you! That we are missing our active, daily interaction and exciting times in conversing with you and showing you around,  and sharing the latest information on properties for sale, trends and statistics in the property market! The bottom line amidst these rollercoaster times, is that we all will come out of this! We all need a place to call home-sweet-home and YOU live at the centre of making this happen!

At least there is light in the tunnel where it was announced earlier this afternoon that the SA Reserve Bank in joining the world’s leading banks in aggressively cutting interest rates, where it announced a further and fourth interest rate cut so far this year. It brings the repo rate to an almost 50-year low at 3.75%! Cutting the repo rate by 275 basis points since the beginning of this year, our prime lending rate now is 7.25% and this will for sure bring a welcoming reprieve for most cash stricken households, struggling to keep their bond repayments intact during this dark and uncertain economic period.

The ongoing challenging lock-down circumstances is claiming victims all around us and on several fronts.  In the process also basically forcing all real estate and related work to have come to a standstill. Irrespectively, all of us at Heiberg Estates are still busy working on the internet and using all available mediums at our disposal in making contact on a regular basis with as many clients as possible. Of course, adhering and following all Covid-19 rules and regulations, and in addition to Heiberg Estates protocols for safety and smart marketing which have all been in place since the lockdown was announced.

Belief me, this lockdown is tough and challenging on everybody where every SA citizen is directly affected. But we are a nation that have survived much worse and without any doubt, our Rainbow Nation will do so again, one way or the other!  In spite of increasing challenges on both political- as well as economic fronts, it is heart-warming to see and experience the united front in our country that was formed against this unseen enemy, which threatens all nations across all borders and around the world. May this newly found momentum of standing together and especially this united focus recently demonstrated amongst most political parties, keep on track and the momentum gained increase and centre around the well-being of our nation as a totality, and not on individual gains only as was demonstrated especially over the past 10 years.

One of the biggest challenges for the SA Real Estate Market, is for sure the still very limited working but basically closed Deeds Office where there is an enormous delay in transfers – resulting also in a lot of Municipal Clearance Certificates that have lapsed. One can but think of weeks and months of frustration for both Sellers as well as Buyers lying ahead, as bond applications, registrations and transfers are continuously being delayed. The average monthly property transfers in South Africa are between 10 000 and 12 000 transactions and we can but hold our hearts for the 2-month backlog and still growing in numbers, across our country! And when the Deeds Office will be able to catch up and function normally again.

Equally noticeable we are experiencing delays in bond application finalisations as more and more banks are indeed increasing their strict lending criteria before granting a bond to prospective Buyers in order to limit their own risks. FNB just announced this week that credit repayment (including bond repayments) to Net Income may not exceed 70%, where previously it was 60% – this making it substantially more difficult to qualify for a bond and to conclude property transactions successfully! In general, we expect (and already are experiencing) an increasing percentage of bond applications to be turned down as more and more people are at risk of losing their jobs or forced to work for lower salaries which hugely impacts on all around affordability.

Taking the latest property price trends into account, so many factors and continued uncertainties across the whole economic/political spectrum is putting huge pressure on property values and property sales right now. Property for sale stock coming unto the market, is increasing where people whom can’t afford their monthly bond repayments any more, due to having lost or are in the process of losing their jobs or having to take salary cuts, are being forced to sell. Combined with the general hesitancy amongst most present property investors that are rather following a wait-and-see attitude due to all the economic and Covid-19 uncertainties, the remainder of 2020 will be challenging where successful sale volumes all over SA, are expected to decrease to as much as 40%-50%, especially looking at the medium- to higher price range properties. We are already observing properties in the high end price brackets, selling at up to 20% less than the asking price. Year-on-year house price appreciation slowed to 1,9% as recorded by the latest FNB House Price index – the lowest in the past 9 years. Unfortunately, this trend is expected to continue longer that normally due to pre-existing Covid-19 weaknesses in consumer fundamentals, combined with continued general political- and economic uncertainties as well as second-round effects on our labour market with increasing unemployment.

In summary – there is always hope, there is always a way and as somebody said that the night is at its darkest, just before the daylight breaks. (Hopefully soon for all of us!). For the property buyer, circumstances in decades have not been as favourable as right now to invest in properties and this scenario will remain for the foreseeable future. We know that much of Warren Buffet’s enormous wealth was created in investing in properties during challenging times. As he stated: “It is wise to be fearful when others are greedy, and greedy when others are fearful”. The recent collapse of the stock- and oil markets again demonstrating the risk in those investment sectors. Yes, property prices lately have been decreasing moderately and in single figures, but will for sure pick up again in time to come! Brick and mortar will always across our globe be recognised as a safe long-term investment heaven for your hard-earned money, and it has proven itself over time as such.

As we all at Heiberg Estates are determined, focused and here to serve our Buyers, Sellers and Tenants 24/7 to the best of our abilities under these rather challenging circumstances and adhering to all the Covid-19 rules and regulations, please be assured that we remain to be there for each and every one of you, our cherished Property Partners! You can count on us for the very best and continued professional service under all circumstances. Please don’t hesitate to contact us any time also during the lockdown whether you are a Buyer or a Seller. And do keep in touch via our website for the latest photos and videos of our residential and commercial properties for sale or to rent: www.heibergestates.com

We all at Heiberg Estates are there for you – irrespective of any circumstances – please remember that! Be safe, look after yourselves and wishing you all good health! Let’s be grateful for what we have, let’s share where and however we can especially where the need is high amongst our precious Rainbow Nation! We need each other – like never before.

Yours truly

Bambie & Heiberg Estates Team

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