The coronavirus crisis is expected to have a particularly nasty impact on house prices in South Africa.

Widespread job and income losses do not bode well for demand and the supply of for-sale properties is expected to rocket as households can’t afford their mortgage payments anymore.

Pricier properties are expected to be worst affected, with high-end home prices already under pressure even before the crisis.

One Fresnaye mansion – originally listed for R50 million – is now on the market for R10 million less. A 5 bedroom house in Bantry Bay previously on sale for R39.5 million is now available for R29 million, while a two-bedroom house on Clifton’s Third Beach (once listed as R37.5 million) has an asking price of R29.9 million.

Price reductions are also evident across other upmarket areas, including in Gauteng, where a number of Sandton properties are now also listed with “urgent sale” and “priced to sell” descriptions.

FNB property economist Siphamandla Mkhwanazi says higher-end and luxury markets will likely be hardest hit this year because of the depressed economic sentiment, and the excess supply of these properties – which is outstripping demand. In contrast, the other side of the market – the so-called “affordable” category – should remain stronger this year, as there aren’t enough properties available to keep up with demand.

The property research group Lightstone expects that the luxury market segment will continue to suffer even more than it did in previous years.

In Lightstone’s best-case scenario – where South Africa’s GDP decline by only 3% this year, and the housing market benefits from lower interest rates – luxury property prices will fall by this 5.9% this year. By contrast, mid-value property prices will still increase by 0.7%.

In the worst case scenario – the local economy shrinks by 10% – luxury properties will lose almost 20% of their value.

The SA Reserve Bank expects a contraction of around 6% this year, while FNB’s Mkhwanazi believes that GDP is likely to contract by 7% to 10%.