With unemployment rising to 32,6% in the first quarter of 2021, one can expect that hard times are ahead for many South African households.
In some areas, the effect of this can already be felt within the distressed property market, warned Regional Director and CEO of RE/MAX of Southern Africa, Adrian Goslett. He said the concept of ‘distressed properties’ refers to homes that have been put on the market because the homeowner has fallen into financial difficulties and needs to be relieved from his/ her debt.
“Financial institutions offer their clients the opportunity to sell their homes through their distressed sales programmes before they fall hopelessly behind on repayments and the bank is forced into repossessing the home. Naturally, we expected that the number of these kinds of sales would increase following the lockdown. But, as yet, our Distressed Property division reports that the market as a whole has not experienced significant changes in activity, although certain nodes have experienced more sales than others,” he explained.
Riana Burger, Certified Distressed Property Advisor at RE/MAX Masters, said that she has noticed an increase in these kinds of sales since the pandemic first started last year.
“Last year, I concluded only one distressed property sale. This year I have already sold five distressed properties. I have been involved with distressed property sales for a number of years, but this year is the first time I have had sheriffs coming to deliver notices at three of these properties. This has never happened before,” she said.
She predicts that there will be an increase in distressed property sales in times to come.
“If you only look at the hospitality, tourism and events sectors – the outcome for those working in these industries has been devastating,” she stated.
Her predictions are similar to those of fellow Distressed Property advisor, Jacques du Preez of RE/MAX Jowic. In his experience, there have actually been fewer distressed property sales than before.
“Banks are trying to be accommodating at this stage and are not putting as much pressure on defaulting homeowners as they did before the pandemic. But, this will not last forever. Sometime either at the end of this year or sometime next year, I predict that there will be more properties coming onto the distressed property market.”
Homeowners are encouraged to make use of the distressed property programmes if their bank offers it to them.
It can be incredibly challenging to make the decision to sell a home through a bank’s Distressed Sales Programme, but these programmes offer struggling homeowners an opportunity for a fresh start.
