The South African property market has weathered many challenges, and the new Government of National Unity (GNU) could herald better days ahead, says Paul Stevens, CEO of Just Property. Much like the previous coalition government, the effectiveness of the current GNU will depend on its ability to unite disparate parties, implement economic policies, and initiate regulatory reforms that foster economic growth and development. For the property market, pro-business policies and infrastructure improvements could create a favourable environment for property investment.

Economic Outlook and Property Market Impact

Bradd Bendall, National Head of Sales at BetterBond, highlights that consumer confidence is crucial to the residential housing market, which has significantly slowed due to high inflation and interest rates. With inflation now dropping (headline inflation was 5.2% in both April and May 2024, down from 6.8% and 6.5% in 2023), there is hope that interest rates will decrease later this year by 25-50bps, potentially stimulating the property market and improving consumer sentiment.

The overall impact of the ANC-led coalition on the property market will largely depend on political stability and policy direction. Investors and homebuyers will be closely watching the GNU’s ability to maintain unity and implement effective economic strategies. Without this, market volatility could negatively impact property values and investor confidence.

Cautious Optimism

On 12 June 2024, Investec Chief Economist Annabel Bishop noted that fixed investment remains key to economic growth, with improvements in Eskom's performance expected to lift GDP growth. Although May's growth forecasts dipped slightly, economists remain optimistic about medium-term growth, with Momentum predicting growth of 2.4% to 3% over the next five years if political stability is ensured.

While the rand strengthened to below R18/USD on 20 June, investor caution set in as markets awaited cabinet announcements. If the GNU can reassure local and foreign investors of its stability, we could see further strengthening of the rand, boosting the attractiveness of investment assets, including property, due to potential capital gains from currency appreciation.

Positive Foreign Sentiment and Local Skepticism

Despite the uncertainty, foreign sentiment towards the ANC-led coalition remains cautiously optimistic, likely driven by hopes for greater political stability and predictable governance. Historically, periods of perceived stability have been linked to increased foreign investment in the South African economy, particularly in the real estate sector. This could lead to boosted property development and rising property values.

Locally, while there is cautious optimism, the South African electorate remains wary. Voters remember the gains made under the previous GNU but are also mindful of the political challenges that have arisen since. Many homebuyers and investors are adopting a wait-and-see approach, weighing the potential benefits of a coalition government against the risks of political instability and policy uncertainty.

Effects on Consumer Confidence and Homebuyers

For homebuyers, a more optimistic economic outlook often leads to enhanced consumer confidence, a critical factor in sustaining demand in the residential property market. As people feel more secure in their financial prospects, their willingness to invest in homeownership increases, thereby stabilising or even boosting the market.

Future Prospects for the South African Property Market

While the ANC-led coalition holds promise for positively influencing the property market through foreign investment and increased consumer confidence, the real outcome will depend on its ability to deliver political stability and sound economic policies. Investors and homebuyers are advised to remain informed about political developments and follow market analysts closely.

At Just Property, the outlook is optimistic. CEO Paul Stevens acknowledges the potential challenges but remains hopeful, drawing parallels to the post-1994 government of National Unity and the improvements that followed. He believes the parties in the GNU can work together to bring about positive change, with brighter days ahead for the South African property market.

For more information on Just Property, please visit www.just.property or call (087) 059 8888. Follow Just Property on Facebook at https://www.facebook.com/JustPropertySA/ and Twitter at https://twitter.com/Just_Property.

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