SIMON BROWN: I’m chatting now with Grant Smee, MD of Only Realty [Property] Group. Grant, I appreciate the early morning. You make the point in a recent note you put out that many homeowners are under pressure. We understand the story. It’s tough being a consumer [with] inflation of course, and higher [interest] rates. [We have] another meeting of the [Reserve Bank’s] MPC on November 24, this month, [with] almost certainly another rate increase. So a lot of folks are thinking that perhaps selling your home is a nice and easy solution. You say: “Hang on, maybe not so fast.”
GRANT SMEE: Good morning Simon, and thanks for having me. Yes, I think it’s been a consistent theme in terms of home ownership and the cost of home ownership. I think interest-rate increases are just compounding the issues we’ve had around rates and tax increases, as well as levies in sectional title complexes. It’s just a compound effect on owners, and a lot of people are looking just to sell.
I think people need to take a step back and remove a level of emotion. It’s an emotional sort of thing, your home.
So just consider other options potentially, because you only realise a loss in property when you have to sell … be patient and take your time before you make that decision.
SIMON BROWN: Of course, selling involves costs and it depends – if you put a nice big chunky deposit down when you bought the house, then maybe you’ve got some capital you can pull out. You make a really, really great point. That’s something that I hadn’t thought about. Obviously if your house is in a particular area or a couple of streets, a suburb, have a look around supply in that space. If there are a dozen other houses [for sale] now is not the time. If you’re the only house, then maybe. That was something which had never really occurred to me. What is the competition, I suppose?
GRANT SMEE: Supply and demand is just something that’s sort of commonly spoken about, but you really need to look at competition in the markets when you are going to look to sell. If there are lots of options, you are creating the opportunity for a buyer’s market, really, and for somebody to put pressure on your price point.
So by keeping a profitable market and choosing other alternatives, you potentially achieve more later on if there’s not that much competition.
SIMON BROWN: I want to come to the buyer’s market in a moment, but something else which you put in the note that I thought was quite smart was the idea of don’t sell, but maybe move out, and rent yourself somewhere cheaper, and then rent out the house. In other words, almost get a third party to fund it, and you kind of downscale. Again, [that way] you don’t realise that paper loss which you have on the property, and you continue to own the asset.
GRANT SMEE: Exactly. I think there are lots of options for somebody to look to move and rent out. If I look at the sort of coastal areas particularly, a lot of people live in quite expensive homes [whereas] they can rent in the area or surrounding areas [for] a lot cheaper, and then [they can] find somebody who’s willing to rent their property. Certainly due to semigration there are lots of people who are looking to rent – or could be looking to rent – your property at the price that you need.
SIMON BROWN: A last question. You mentioned the buyers’ market. My simplistic view is that as rates rise that sort of benefits the buyers in one sense, because there are going to be some people who need to sell for one or another reason. The trick of course is that it’s going to cost me more. Is this more a buyer’s market out there? Is there a good opportunity for people who are looking to purchase?
GRANT SMEE: Yes. Certainly in pockets there’s certainly a buyer’s market, and it’s always difficult to look at that market as a whole; you’ve got to look at pockets. And certainly it is a buyer’s market. What I’m going to say is it’s certainly the right buyer’s market. If you’re a buyer with approved finance, a good clean credit record, the banks are certainly willing to lend and looking to lend to you, and are offering very competitive rates in this environment. And so the right person with the right credit profile [is] certainly a strong buyer and in a very strong position to look to buy from people who are under pressure.
SIMON BROWN: Are we still seeing semigration, the move down to the ocean from us living up here in Gauteng?
GRANT SMEE: Yes, I certainly think it has slowed somewhat. We have seen an uptick of activity in the Johannesburg market [this year], where we saw a slow down last year with mass semigration. So I do think that it has slowed down somewhat, but I don’t think that it’s going to stop. We are certainly seeing higher activity than we did pre-Covid. There certainly is semigration to certain areas; less so, maybe, to Cape Town than we’ve seen in the past, [but] certainly to more affordable spaces – George, Mossel Bay and the north coast.
SIMON BROWN: Down by the sea. I think all Gautengers miss the sea.
We’ll leave it there. Grant Smee, MD of Only Realty Group, I appreciate the early morning insight.