DURBAN - The past year has been a trial for homeowners, buyers and many in the SA real estate industry, but there are better times ahead said Gerhard Kotzé, MD of the RealNet estate agency group.
Kotze believes market sentiment will improve substantially after the mid-year elections, which will settle a lot of local uncertainties about the political and economic direction that SA will be taking for the next few years. By then the Brexit issue and US/ China trade war that are currently causing global uncertainty and volatility in the financial markets will hopefully also be resolved.
Meanwhile, he says, many local market indicators are already positive and the most astute buyers and investors are purchasing now, while prices are still relatively constrained and sellers are still willing to negotiate, because they believe that the tide has already started to turn.
"Three positive indicators in December, for example, are the large drop in the petrol price, a return to positive GDP growth (2,2 percent in the third quarter) and an increase in the SA Chamber of Commerce Business Confidence Index for the third month in a row," said Kotze.
Billions of rands are also already in the pipeline to boost local business development and employment creation after this year’s Presidential summits, and we expect that these pledges will start to bear fruit very early in 2019.
Looking at the real estate sector itself, Kotzé notes that it appears from Lightstone data to have gained about 77 000 new homeowners a year since 2015, while the private sector supply of new formal homes in municipal areas totalled only about 30 000 a year over the same period.
What is more, he says, the Absa homeowner sentiment index, which reflects the percentage of survey respondents with positive sentiment regarding property market conditions, remained at a very respectable 72% in the third quarter of the year, although it was down from 73% in the second quarter due to consumer concerns about the question of land expropriation without compensation, the economy being in a recession in the second quarter, and continued political uncertainties.
“The amount that is expected to be poured into the residential property market as these plans come to fruition over the next 18 to 24 months is at least R43bn – and that’s a prospect which I’m sure even the most bullish commentators on our sector will agree is pretty cheerful, especially since housing construction is also a major employment creator.”