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Will Property Prices Drop After Lockdown?
The world has a new bully and its name is COVID-19. Just when you thought things couldn’t get worse, they do. Anything that undermines the economy is bound to undermine residential and non-residential property markets.
You might think, “sure, real estate is feeling the pinch, but surely it’s not as bad as other sectors?” Maybe not, but the question on everyone’s lips right now is; will property prices drop after lockdown? Read on to find out.
The Good News and the Bad News
At this point, it’s abundantly clear that the real estate sector is no exception to the pandemic’s economic impact. As unfortunate as that might be, the home truth is that investors are as excited as a kid in a candy store.
It was not so long ago when lockdown started, but already we’re seeing a slump. Last quarter South Africa, the national median price for sectional titles went from around R1 million down to about R963 000, representing a drop of more than 8%. This is music to the ears of smart and well-prepared property investors.
Ledger on the Edge
What exactly do we expect real estate numbers to look like after lockdown? To answer that, we’ll have to look at what the numbers looked like before lockdown.
The number of bonds from January to March this year went down more than 5% and the number of transfers decreased by 10% from last year, the Deeds Office reported.
All of this suggests that pandemic paranoia was already making the market sluggish before the lockdown was implemented.
The Best Buy
Now that we know that property is getting cheaper, the question is; what’s next? How do we know what to buy? Where’s the value for money? Is it in sectional titles or freehold?
The statistics are clear; sectional titles have been dealt the biggest blow, as they’ve dropped by almost a tenth. As for freehold homes, last quarter gave us a 4.6% increase in the average asking price.
Out of all the transfers made last quarter (without taking into account farms, land only transfers and estates), almost half came from freehold properties while sectional titles accounted for less than 30% of the transfers.
Want to know the sweet spot for property price ranges? Most properties sell for between R800k and R1.5 million. This gives us a 25% slice of all transfers.
Properties ranging from R400k to R800k are quite popular with a 24% slice. As for properties between R1.5 million to R3 million, they took a little under 16% while those in the R3 million+ range only got 5% of the transfer share.
If you’re still sitting there wondering if you should buy real estate, you’re wasting your time. Someone could be snatching the space of your dreams right under your nose! If you know what’s good for you, you’ll do everything you can to invest in property, opportunities like this are rare to find.
Contact Live + Work to find out more about a unique lifestyle design concept created to accommodate the needs of our rapidly changing world. A combination of innovative and practical design makes this one of the most lucrative opportunities available to investors today.
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