Survey reveals lockdown effect on property
avills Global Market Sentiment Survey, a review evaluating the effect of the Covid-19 pandemic on the global property market, highlights that 67% of countries around the world are experiencing a “moderate negative impact” while 29% are suffering a “severely negative impact”.
In association with Savills, Pam Golding Property group CE Dr Andrew Golding brings the lockdown reality home by tracking its impact on the South African residential property market.
SIn the first of a series of global sentiment surveys, Golding says although it is possible to transact and agents keep buyers in the loop remotely, the closure of deeds offices causes a delay in the processing of concluded but unregistered transactions. This has dire economic ramifications. Furthermore, although transactions that are under way can be processed online partially, the market is more or less in limbo until the lockdown is lifted.
“This means no transfers are taking place, municipalities are not issuing rates clearance certificates and the ability of service providers issuing compliance certificates may be constrained.”
Golding foresees farreaching consequences. “The property sector, together with finance and business services, was the second biggest contributor to overall GDP growth in 2019, according to Statistics SA. The freezing of the industry means government is precluded from receiving muchneeded revenue from transfer duty payable from transactions already being processed – a significant contributor to Sars.
“The implications of the inability to transact will be broad, especially for distressed sellers in the current economic recession, as they remain indebted and under pressure from creditors, who are in turn similarly impacted.”
In addition, there are roughly 50,000 property professionals and office personnel who will not be earning an income on sales as the industry is commission-based. And because the current pipeline is now held up in the deeds offices, any new cash flow is halted.
Golding recognises the crisis is a humanitarian issue first, but points out that even the partial reopening of deeds offices would bring significant relief.
Post-lockdown he hopes for pent-up demand from transactions already in progress. He foresees financial distress giving rise to a repricing of certain markets, different supply and demand scenarios in different areas and the likelihood of a new way of viewing properties and transacting online.