PROPERTY IN A CHAOTIC COVID WORLD
The shocks of hard lockdown and a cold wet winter are behind us. Spring in Cape Town has seen a bounty of bright wildflowers after the rains and we are all adjusting to a world in which Covid-19 is endemic. And as much as summer is promising blue skies, our economy has taken a hard battering and it is not all sunshine.
Today our Finance Minister presents the medium-term budget on the heels of the President's economic recovery plan which received a lukewarm response at best. Minister Mboweni has his work cut out with the economy expected to contract anywhere between 6% and 12% and more than 2 million jobs lost during the "hard" lockdown due to Covid-19. SAA, the SA Post Office and SABC are collectively asking for over R16 billion and the public servants wage bill which accounts for more tan a third of government's expenditure is facing cuts against Cosatu's declaration of "war". Additionally, we are facing reduced tax revenues and growing debt. Some cheer is that the rand is at its highest in more than seven months reaching a level last seen since a couple of weeks before South Africa entered its "hard" lockdown on 27 March 2020.
Last September we shared our views on the Cape town property market in which we confirmed the shift to a buyer's market after four years of house sales declining in volume year on year with a drop in the average house price from 2018 by an average of 12% in 2019. The market had been impacted by Eskom and the return of load shedding as well as the elections held in May 2019, both contributing to buyers generally feeling jittery. We saw an oversupply of rental properties but on the positive side, we saw more opportunity for first time home buyers to enter the market and so there was talk of a recovery in 2020. Covid-19 then arrived, and all bets were off. We are now in a position to reassess our views of last year.
2019 saw a drop of approximately 8% in the volume of houses sold in 2018 and to date 2020 has seen a drop of just over 55% in volume. The average house price however has seen an uptick to nearly equal the average reached in 2018.
There are currently 12 188 properties for sale on the Property24 portal for the Cape Metropole area (this includes houses, flats and townhouses, vacant erven and commercial properties) with an average of 1 473 properties coming onto the market each month from January 2020. With only 2 689 properties sold to date in this year and mortgage interest rates at historic lows, there is absolutely no doubt that we are firmly entrenched in a buyer's market.
It is our experience that buyers know the market and use the property websites to research properties before they venture into viewing and are taking their time to look for the best value they can get. We accordingly advise our sellers to consider the valuation and pricing advice of their agent carefully and to look at properties similar to their own in type and location as well as number of days on the market in order to confirm realistic listing prices.