Updated: Jun 25, 2020
According to post-COVID-19 reports, real estate in South Africa is definitely bouncing back with renewed vigour.
And these are the 3 tops ways you can profit the most from your real estate investment today:
1. USE PROPTECH TO CUT PROPERTY EXPENSES:
Whether you’re in residential or commercial real estate, embracing technology will help win over buyers, sellers, residents, and tenants. Property technology, or PropTech, has been helping real estate companies gain a competitive edge for years. COVID-19 has accelerated the trend by forcing the real estate industry to upgrade its processes and tools.
In a recent survey whose goal was to provide insights about how consumers want to safely navigate residential real estate transactions during the COVID-19 pandemic, respondents said they weren’t ready to go to an open house yet and listed what conditions it would take for them to feel safe enough to do so again. Like the approval of a COVID-19 vaccine (47%) and assurances from the local health department that touring open houses would be safe (45%).
Therefore, the pandemic has accelerated the digitization of real estate in a big way with agents and brokers turning to technologies to manage the sales process--from conducting virtual property tours to moving legal paperwork to the cloud to close deals remotely.
So strongly consider the value of a virtual tour, and enhance the experience by including a tour of the neighborhood or providing written information about home improvements the seller has made.
2. INCREASE CASH FLOW BY ADDING VALUE TO PROPERTY
With the majority of property buyers still concerned about public health, you can easily increase your cash flow by considering and installing serious health and safety measures. Buyers and sellers see value in precautions, such as providing sanitary wipes, limiting visitors to two to four at a time, providing hand sanitizers, and requiring masks, gloves, and shoe coverings. And these are precautions that will need to remain in place over the long term.
According to Gina Derickson, research director of research firm Engagious, "People want to know that cleaning has taken place before they enter an establishment; they want to see professional cleaners rather than staff (or homeowners) working on high-touch surfaces like doorknobs and elevator buttons; and the right products and right wording are important. People prefer terms like “sanitized” and “disinfected” over “cleaned” on signage."
Also an additional way to easily add value to the transaction is to involve a professional real estate professional or agent in the process.
According to a survey, 54% of buyers say a real estate agent’s guidance is especially valued during the pandemic. What matters the most to buyers and sellers about in-person tours is the real estate agent, who is expected to know and enforce health-related safety rules. Sixty-four percent of buyers and sellers state that agents should understand state and local protocols for COVID-19 safety and provide guidance, and 63% of buyers and 64% of sellers say that if someone in the home is not following health protocols during a visit, they expect the real estate agent to address it.
Helping buyers uncover valuable information about a property, helping them sift through online listings, and providing more in-depth pictures and videos of properties were among the ways agents could be of service to clients. And while 40% of buyers and 52% of sellers stated that they wouldn’t need to meet their real estate agent in person to buy or sell a home, they did place a premium on oral communication—70% of buyers and 66% of sellers said they felt more comfortable talking on the phone or talking via Skype, FaceTime, Zoom, or a similar app that allows face-to-face communication, which are much higher numbers than those who felt comfortable communicating by email or text.
What this means, is that agents really matter during the pandemic. Forty-seven percent of buyers and 53% of sellers indicated that relying on a real estate professional for buying or selling a home was more important than before. The agent’s value has gone up tremendously as a result of the pandemic. And this is simply because people need reassurance.
3. NOW IS THE BEST TIME TO BUY AND OWN YOUR OWN PROPERTY
Initial predictions regarding the future of the residential property market in South Africa as a result of the Covid-19 lockdown have painted a sombre picture.
These include significant drops in house prices and more supply than demand.
And so people have realized during these tough times that home is the only safe environment we have. With work from home increasing, the people need to make sure they have a good home and the right spaces. People will be looking at owning homes rather than renting as that is the safety net we all need.
In addition, there are signs of recovery in terms of home loan application numbers.
In April we saw a 70% drop year on year, but in May this improved to only 30% lower year on year.
And thus far in June, we have numbers in excess of pre-pandemic targets. This could be either pent-up demand, or low interest rates driving demand.
If this trend continues during the remainder of June, we could be looking at a substantial recovery in the residential property market sooner than expected, at least with regards to activity and the granting of home loans by the banks.
The industry has recently recorded positive activity from first-time homebuyers, with the majority of applications received in May coming from this category of buyers.
The approval of bonds for first-time buyers is at its highest for three years, suggesting that a good number of these applications are realistic in terms of affordability, which bodes well for their bond repayments over time.
He said first-time buyer numbers “reflect the market’s understanding that the current scenario is the most favourable it’s been in many years for people who want to get into home-ownership.
Many of them couldn’t afford it until now, but with interest rates at 50-year lows, it’s the best opportunity new buyers have had for decades, to acquire property.
TAKE ADVANTAGE OF REAL ESTATE BARGAINS ON THE MARKET
With property prices and competition falling away,now is a great time to invest.
History shows us that after most major economic disruptions like the GFC, house prices typically rise.
So those who did buy during the pandemic could do so with the confidence they would be buying towards the lower end of the market.
This means for those who have a secure job and their finances organised, this is a great time to buy a home or investment property at a price that was impossible to get a couple of weeks ago when the property markets in big capital cities were booming and there were more buyers around than sellers.
There is no doubt there will be opportunities in the market for those who are willing to go against the crowd and when they look back in a year’s time and certainly in five or 10 years’ time, they will remember 2020 as a great buying opportunity for property.
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