We are connected together across the world via social media posts and smartphone messaging, and yet, each of us is living a divergent reality in our different countries.

Many clients have commented, that they intend to purchase property during (or shortly after) lockdown. To maximise profits by capitalising on lower property prices due to Covid-19 quarantine issues.

Unfortunately thousands, no, millions of jobs, careers and livelihoods have been lost over the last two months. Many more will follow in the months to come, when those hanging on by a precarious financial thread finally fall into unemployment or loss of business.

Lack of salaries transposes to millions of unpaid rental payments across the world, which puts landlords in perilous positions regarding mortgage payments due each month. Along with principal homeowners, also unable to meet monthly payments, it seems that a flooded property market is inevitable.

Oversupply of any product, as we know, leads to higher competition, and unfortunately for the sellers, lower prices. Bad for homeowners, brilliant for cash-rich investors.

Is now the time to buy? Are we at rock bottom?

If we could teleport into the future and look back right now, would these be the rock bottom prices? In reality, the next few months will be crucial. In some more stable and secure markets, such as Switzerland and Canada, (to take the two top-ranked “economically stable countries”, as per the “2020 Best country report”), the lows may not be as severe as a more third world country, such as South Africa.

Currently, non-payment of rent is a genuine phenomenon in all countries today. Many that give higher government grants will have cushioned the blow in first-world countries across the board. More tenants have been covered by some form of government help, and therefore fewer landlords and principal homeowners succumbing to repossession. In the short to mid-term at least, the dip in property prices may not seem as severe as other countries.

The lockdowns are slowly lifting and with millions returning to work, the possibility of rental payments finally being met, and paid back is a reality. Therefore again, less mortgage payments missed, less properties repossessed, or thrown onto the market to claw back the borrowed amount before the banks reclaim them.

The market will take a dip, along with the rest of the world in the short-term, but with hungry investors looking for a safe investment, this could buoy up the market and push it back to normal levels in a much quicker period.

The time is to buy now, in a moment of international uncertainty, and wait for the bounce back, and return on investment on a mid-term speculation.

Is this true for all countries?

The special Covid-19 grant in South Africa, created to aid the millions of unemployed is ZAR350 per month. Five million applications were made and by the 21st May 2020,  the CEO of the SA Social Security Agency (SASSA) confirmed that the claims were still in process, and only ten people in total paid. Out of five million.

ZAR 350 equates to just under US$20 (on the 25th May 2020). Twenty US dollars to live on for an entire month. To cover food, electricity and any rental or mortgage payments due, and nearly five million people on the breadline are still waiting for it.

Some further 1.9 million currently unemployed, should have received their UIF (Unemployment Insurance Fund) payments this month (less than half did). Paying out between 36% and 58% depending on hours worked monthly, (up to a maximum of ZAR 6730 (US $380) irrelevant of how much you earn.

Foreigners (currently equating to 2.2 million of the population), are struggling to receive their UIF payments, as “the UIF system does not recognise passport numbers instead of South African ID numbers”,  stated by the UIF online. They are trying to work with the local tax offices to clear this backlog.

On top of these three dire situations, millions more, who do not qualify for the meagre US $ 20 / month or the UIF, have seen their businesses collapse. Entrepreneurs across the country, who have poured everything into building their dream business, are now left with nothing.

So where exactly should I buy?

An investment is considered “safe” when it gives (relatively) good returns and assures little, to no risk. The gains are usually lower than average, but this is weighed out by the peace of mind your money is safe.

Investing in property in Canada and Switzerland now, would be considered “a safe investment”, albeit with lower returns.

8.75% of Switzerland are currently unemployed (due to Covid-19), and the government extended their rental payment holiday to 90 days. Therefore, any payments ordinarily due on the 1st April 2020, can now legally be moved to just before the 1st July to allow some relief.

Canadian tenants did well, even in the face of adversity and unemployment, with a whopping 75% covering their rent in April, and a further 10% covering partial rent.

These statistics reassure investors of a safe investment, and with the undoubted drop in housing prices, are ripe for investors to snatch up.

A “high risk” investment carries the possibility that you lose some, or all, of your investment, but the rewards are usually higher.

As of today, 25th May 2020, more than 30% of South Africa is currently unemployed. This figure is expected to soar up to 50%, (according to the South African Treasury’s data released in May 2020), with little relief in sight. One-third of tenants didn’t make their rent in April, and the figures will be worse for May.

Level 3 approaches on 1st June, with many businesses allowed to return to work, but the damage is done for many. With up to three month’s rent missing, evictions are waiting (for the last day of level 3 currently), and tenants leaving with unpaid rent due.

A glut of properties will flood the market, with the higher unemployment rate and a more significant percentage of unpaid rentals across the country, along with the plethora of empty Airbnb’s – thousands of landlords are out of pocket. Many will be forced to sell their homes, and the average property price will be pushed down by oversupply.

Lower property prices mean investors from two or three years ago, when the Cape Town’s housing market sky-rocketed, could be out of pocket. They certainly will feel the brunt of the “high-risk investment”.

Don’t buy in South Africa then?

Interestingly enough, if you have available cash and can wait out (what could be), a long bounce back – if at all looking at the country’s politics –  now would be the time to invest in a riskier country. The prices will bottom out far more than the safer, supported first world countries and when (if), the market rebounds the increase will be considerably higher.

High risk, high return.

In essence, no one knows where each country will be in 12 months or 5 years’ time. No one knows if we’ve hit rock bottom or still have 50 feet left. Only one thing is sure, house prices across the world will drop, and the investor himself must decide what level of risk he is willing to take, for what level of return.