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Pintel

SA Lockdown | Luxury home prices taking strain

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High-end home prices that were already under pressure even the coronavirus crises will be the worse affected.

Highlights

  • Lance Cohen from Lance Real Estate interviewed
  • Prior to COVID-19 property sales were already down 20-30%
  • Estate agents not allowed to take people to see properties under level 5, 4 of lockdown making matters worse
  • Estimated damage will only be known six months after lockdown, might be down as low as 50% from highs in 2017, 2018
  • Average time for property to sell prior to lockdown was in the region of 12 months
  • Volume of year-on-year sales down one-third (33.3%) than what was sold previous year, (this is pre-lockdown)
  • During lockdown, only one property sale in May and five in April recorded in Atlantic Seaboard (V&A Waterfront to Llandudno)
  • Moratorium on banks, won't solve problem except get property owners further into debt
  • Reckons we are still "long away from" from the property market bottoming out, estimates up to two years
  • Lots of inventory on the market, interestingly rental market picking up, interest rate cuts making it more attractive
  • Banks more cautious not lending to the extent they were lending before
  • It has become very attractive to foreigners to buy property in SA with the weak USD/ZAR exchange rate, you can buy at 50% less than what it was a year ago, problem is foreigners can't fly into country due to COVID-19 flight restrictions
  • We have a problem with municipal valuations which was raised between 20 - 70% from 2015 to the current values which in reality is probably valued / worth less than what they were in 2015 

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Posted (edited)
On 5/22/2020 at 5:54 PM, Pintel said:
  • We have a problem with municipal valuations which was raised between 20 - 70% from 2015 to the current values which in reality is probably valued / worth less than what they were in 2015 

I share this problem as well, municipal values impact both rates and resale value yet the approach taken to get there is problematic especially in a "popular" city like Cape Town where there is a high cost of living but an extremely dangerous place to live. Will greedy goons like the City of Cape Town revalue and adjust properties value? No probably not. But the receiver of revenue better be prepared to accept transfer duty at far below what is considered "market value".

Edited by Brakish

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