The impact of COVID-19 on the property sector?

How does it influence property values and possible litigation?

The COVID-19 pandemic has had a major impact on the international population and economic markets. South Africa (SA) has not yet been ruled out and it is expected that this pandemic will still have an impact on the country for quite some time. Apart from the obvious infections and deaths caused by the virus, the implemented measures to contain the spread has had severe consequences. With businesses that are unable to operate, the income generation of society has been severely hampered. General business expenses are also negatively affected and the immediate consequence of this is that many people and businesses will most certainly fail on their contractual obligations. In the property sector, this impact is far wider than just rent foregone (direct impact), but includes the downstream influence of people that should have received that income and further spend in the economy (indirect impact) and the negative growth of new entrants to the sector (induced impact). The link between the construction sector and the property sector should also be taken into account in the assessment of the impact.


The role of property in the economy is due to property being a fixed asset, with the specific attribute of being a scarce resource and mostly indestructible, and as such very attractive as an investment and the consequent ability to act as security for debt. It is furthermore also a good indication of wealth and hence very popular for purposes of wealth tax, such as property rates. In addition, all economic activity happens on property, developed or undeveloped, and all people occupy in some form or another the property of someone. It is, therefore, evident that property forms a very critical part of the economy as a whole.


However, how do we determine the impact on an individual property and what can be expected of property values in the short to medium term future?


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Article by: Dr Douw Boshoff 

*This article is republished with the permission of the Editor of De Rebus. This article was first published in De Rebus in 2020 (June) DR 14.