Proactivity – and Social Media Advertising – can mitigate against a property market pullback

While record-low interest rate levels over the last two years helped give millions of new buyers a foothold in the South African residential property market, an upward trend in the rate, high annual inflation, record-high unemployment, an economy struggling to get back to pre-pandemic levels and the added strain of load shedding have seen the market slow significantly in the last few months.

“Many of these aspects are a global trend – and they’re not going to stop anytime soon,” says Jason Joffa, Business Head: Bridging Finance at Lamna Bridging Finance. “We’re set for more interest rate hikes as SARB tries to combat inflation and I think we’re looking at another 3-4% in the medium term. While that won’t see rate levels anywhere near what they were in the 1990’s, the increase will push entry-level home owners out of the market on affordability”.

The market pullback has corresponded with an increased demand for rentals – a 180 degree switch from the situation over the last two years. PropData CEO Mark Buttress says it will take sales longer to be impacted because of the length of time it takes to process transactions.

A PropData poll of over 19 000 real estate practitioners about their feelings around the most recent interest rate hike showed that 48.9% felt concerned that the increase would have a great impact on the market. 36.1% were optimistic the market would weather the storm and 15% were unconcerned because the prime lending rate is still low. “That shows us that the pullback is mainly going to affect the affordable end of the market, where challenges around employment and the higher cost of living will have a greater impact,” says Buttress. “That was also the sector responsible for most of the industry’s growth during the pandemic. Property practitioners who realise that and read into what is happening will find opportunities to leverage”.

Properties are also taking longer to transfer than before, according to Joffa. “Where a transfer used to take 8-12 weeks, it’s now taking 3-6 months, with plenty more roadblocks,” he says. “Spatial Planning and Land Use Management Act (SPLUMA) certificates can take a year to procure and with the Deeds Office in Pretoria struggling to operate under load shedding, the transfer process is now a huge challenge. That changes the dynamics of a transaction, where affordability levels drop the longer it drags on and the bank could pull the plug on a deal”.

All these challenges affect the work of agents, too – but those who are effectively harnessing the power of social media are feeling the impact, far less. According to Flow Co-CEO and Co-Founder Gil Sperling, when the market is in decline, agents need to use social media ads to stay top of mind and attract new clients. “Agents can show sellers they can promote their properties better with creative campaigns and featured properties. They can also attract new clients and get more stock through engaging ads that command attention,” he says. “50% of sellers only talk with one agent before deciding who to work with, highlighting the importance of staying top of mind. A consistent social media presence helps generate that kind of awareness, meaning an engaged agent will be the first person someone thinks of when they’re ready to sell”. Sperling says that property practitioners and their brand rely heavily on trust, for success. “Regardless of the market conditions, you are there to facilitate a major financial transaction for someone – and digital channels are where agents are going to reach the modern consumer, so they need to work hard there to constantly be top of mind,” he says.

Sperling says that top agents can use social media to advertise selectively and zero in on exactly the right audience, targeting buyers, sellers and tenants by age, gender and location. Buttress agrees that agents need to be ‘in the face’ of home owners and people in the market, as much as possible. “If agents target them with useful content, they’ll be able to track engagement and retarget people, engaging them with more specific messages, which gives agents a great idea of what the trigger point is for their interest,” he says. “When agents connect the dots through clever tracking, they get better return on investment on their media spend”.