24 June 2020
As a country, we have struggled economically for a very long time and with the current circumstances, we will have even more obstacles to overcome. In March, Moody's cut South Africa's credit rating to junk and economists are predicting a 2020 GDP growth rate of up to -6%.
But this doesn’t mean that there aren’t any opportunities out there.
The drop in South Africa’s repo rate to its lowest levels in nearly 50 years is good news for property buyers:
The news is less positive for those in the rental market. TPN have recently reported a significant decline in the number of tenants in good standing during May and expect limiting escalations in rent as tenants look to downscale. “I expect the economic effect of lockdown to continue to put strain on the rental market for some months and tenants with good credit ratings and low risk profiles will have their pick of properties to rent” says Just Property CEO, Paul Stevens.
Post-Lockdown Realities For The Rental Market
Close tenant monitoring is more important than ever. Stevens points out that Just Property portfolio managers are able to run monthly credit checks to evaluate tenants’ ongoing credit risk, looking at details like new defaults or judgements received, as well as vehicle, rent and loan repayments. Collective risk profiles of the portfolios managed can be measured against industry standards to provide context. Patterns, particularly negative trends, can be quickly identified and action taken. “Diligence and attention to detail is how our rental agents are adding the most value to landlords right now”, says Stevens.
Customer service is playing a key role in managing relationships between landlords and tenants. Stevens observes increased levels of communication between all parties involved, driven by the need to address individual needs in an ever-changing landscape. The Customer Service function at Head Office, as well as the social media team continue to play a pivotal role in community management, strengthening the value offered to landlords through a franchise brand like Just Property. Good tenants are increasingly valuable and maintaining positive relations is critical in these strained times.
Fiscal discipline is something that tenants need to adhere to so that they can maintain good risk profiles. For that reason, we expect more tenants to be down-sizing in the months to come or moving to areas where rent is cheaper. With 5400+ active residential listings priced from R2 305 to R150 000 per month, Just Property is well placed to help tenants in all segments of the rental market to make their moves.
Post-Lockdown Realities For The Sales Market
It remains to be seen if consumers are going to put off buying property due to increased uncertainty and a still weaker economy. Stevens reports positive activity in the sales arena across the Just Property franchise network, even during lockdown where sales had to be concluded without viewings and subject to additional suspensive conditions. For those with cash on hand or access to bond finance, it’s a buyers market.
Post-Lockdown Realities For Real Estate Agents
“More needs to be done to understand and serve the needs of our clients”, challenges Stevens and he is encouraged at how Just Property agents and franchisees have responded with improved value propositions. The range of services offered by our real estate agents is broader than ever as they are forced to look at their value proposition. Their intermediary role stretches way beyond seller and buyer or tenant and landlord. They bring together a myriad of service providers, in real time and on a personal level.
COVID-related restrictions mean that agents will have to be more discerning in their ways of working. “Pre-qualification of buyers and tenants should become the new normal”, says Stevens. This limits foot traffic, which is a key measure to contain the spread of the virus, but it can also serve to streamline business practices. Navigating this will be tricky though, as property is not a fast moving consumer good. The buying process in particular can take years and over that time, financial circumstances are bound to change.
Stevens remains optimistic about post-lockdown realities for the real estate market. South Africa remains a beautiful place to live, full of opportunity for creative and hardworking people.