Outlook of SA’s residential property market amid looting, violence in KZN and Gauteng
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By Vivian Warby
While it is too soon to say what the full impact of recent riots in KwaZulu-Natal and Gauteng will have on residential property, some experts believe it could usher in a rise in semigration to the Cape on the one hand, and a decrease in first-time home buyers on the other.
But, Samuel Seeff, chairman of Seeff Property, believes it is still too early to say what the effect will be on the property market, as “generally, it depends on how long it will take to quell the current violence.
"Obviously the longer it takes for the government to bring it under control, the higher the risk to the economy and property".
Calling for calm, Tony Clarke, managing director of Rawson Property Group, agrees the industry should be able to ride the wave if it is short-lived.
He believes, however, if any sector will be affected, it will be the first-time home buyer, those aged between 28 to 35 years of age, who have been rising in numbers since low interest rates came into play.
He says there may be a drop in these numbers as this younger cohort weighs up their options of moving abroad or staying in the country.
Both Seeff and Clarke say, despite the uprising, the market continued to move this week with sales recorded in Gauteng , KZN, and throughout the country.
Clarke does not believe there will be a collapse in home prices in hotspots, although both say it is a wait-and-see game.
Meanwhile Alexa Horne, MD of Dogon Group Properties, anticipates the recent uprising could cause an increase in the number of people looking to relocate to Cape Town.
She says she has had some calls already from people in Johannesburg who are looking to make the move.
“Many clients from Joburg had already taken a long-term view that they plan to relocate and end up in the Cape in the future. This latest situation has expedited some of their plans and they are now looking to make the move as soon as possible.
“For example, I have been working with a client from Joburg for two years now, and he has now contacted me to say he wants to accelerate his timeline and plans to fly down to Cape Town as soon as Covid restrictions allow to come and view the properties he has earmarked for possible purchase in the Southern Suburbs.”
Clarke agrees semigration, which has been slowing down the last two years, may see an upswing, particularly to the southern coastal areas such as the Cape, perceived to be safer and better managed.
Seeff added that for the Cape, "we have seen that good governance and relative safety has been a significant advantage in terms of driving wealth not just to Cape Town itself but also to the Garden Route".
However Seeff says "we have not seen an increase in enquiries for Cape property as yet, bear in mind that Cape property is more expensive on a square metre basis compared to other parts of the country, so it is not as easy as simply upping and moving here".
He added that whether the notable influx of semigration buyers from Johannesburg to the KZN North Coast will taper down because of the riots and violence, "we will need to wait to see what the fallout will be".
The agency bosses all describe South Africans as "very resilient".
"The country has experienced previous periods of unrest, think of the 1980s before the new democracy of 1994 when civil unrest was a huge threat," says Seeff.
"We did not know whether we would be selling property again, interest rates soared to over 20%, yet the country bounced back and during the economic boom of 2000 to 2006, house prices rose by an average of 20% annually."
"One aspect of the events of the past few days is the importance of communities putting contingency plans in place to protect their property and economies."
The current interest rate is the lowest since the 1960s and continues to serve as a significant incentive to invest in property, hence some best activity in the market over the last three years has been seen.
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