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Why Real Estate needs to be on Government’s list of Essential Services

Every business is at a nail-biting point to see whether they will be able to trade under Stage 4 of Lockdown, or where they fit into the picture, as well as the timeframe for them being able to resume under the different stages.  For some it will mean scraping by and for others it will mean the end of an era…

Government has indicated a staggered or phased approach to opening the economy which has been based on several factors, more especially infection rates and the slowing of them, among others.

“Restrictions on economic activity need to be adapted to epidemiological trends and may need to be relaxed and tightened in different periods,” the proposal said.

They further indicated that “Different levels could be imposed on specific provinces and areas based on the risk of transmission”.  This is according to the South African Market Insights.

This is all well and great, but government also said that sectors would be considered and their decision would also be based on “risk of transmission in that sector, the expected impact of the lockdown, the economic contribution of the sector and the effect on livelihoods”.  This is accordioning to the Presidential Address of the 23rd of April 2020.

This is interesting because in terms of the stats of the South African Markets Insights, South Africa’s GDP for Q4:2019 contracted by -1.4% since 2018, while the Finance, Real Estate and Business Sector were one of the few who saw growth of 2.7%.  We say this is “interesting” because this sector in 2018 accounted for 32.11% of the GDP of the country.  At that stage it amounted to R640,368,228,613.00.

So why would government keep the Finance and business sector at Stage 4, but keep the Real Estate industry at Stage 2 when combined they make up almost a third of the country’s GDP.

We are of the view that Government should not lower an industry that is so valuable in keeping our economy alive, where with suitable regulations and health restrictions it could continue to service the country.  Restrictions and preventative measures could include:

  1. No show houses
  2. Gloves and masks being mandatory
  3. Strict social distancing, even while in the homes
  4. Covid compulsory sanitation of homes (rental and sale)

Also remember:

  1. People have lost their jobs and have been given notice to vacate their homes.  They need to relocate, and the rental industry caters for this
  2. Families have given notice to their landlords to downscale to move to smaller premises in order to survive
  3. Landlords will suffer if tenants do not pay their rent, fail to vacate the property, and banks start foreclosure proceedings against the landlord
  4. Homeowners who are not able to sell their homes will face legal action by their mortgagors for reneging on their bonds if they cannot afford to pay.

While we applaud government’s efforts thus far in combating this unprecedented pandemic, it is quite extraordinary that we have not followed other country’s practices of allowing real estate activities to resume, with strict regulations.

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For more information on COVID-19 in South Africa please visit the South African COVID-19 Portal