It’s coming up sunny for South Africa’s property market
The positive change in South Africa’s political landscape is paving the way for an upswing in the local property market.
“Because our new President, Cyril Ramaphosa, understands business and the importance of stimulating the economy, it is expected that positive growth will be evident across various business sectors, including the property market, over the next 18 to 24 months,” says Chris Renecle, MD of Renprop.
“This was evident in the 2018 Budget Speech, delivered by former finance Minister Malusi Gigaba, where he noted: “We are convinced that as business and consumer confidence return, and as government follows through on its commitments to enable growth with prudent, fast and decisive action, we can exceed our growth projections.”
According to Gigaba, “2017 was characterised by slow economic growth, recession, ratings downgrades, and heightened concerns regarding the governance and sustainability of key state-owned companies.
“In the face of these challenges, the country’s economic growth outlook improved in recent months, partly due to a recovery in investor sentiment and business confidence. Over the medium term, the growth outlook is higher than projected in last year’s Medium Term Budget Policy Statement.”
A further effort to encourage economic growth is the continued collaboration between government and NEDLAC to improve the country’s investment ratings and accelerate economic growth.
“There has been a lot of uncertainty in recent years, which has resulted in a fairly stagnant property market up until now,” says Renecle.
“We have reached the bottom of the property market cycle, which was also adversely affected by the political and resulting economic climates. The recent political changes are expected to bring about positive growth quicker than originally anticipated by many economists and experts.”
It is anticipated that the national GDP will grow at in excess of 2% for 2019, however, Renecle expects an effective growth rate of more than 3% in Gauteng.
Based on this, Renecle says he expects the residential property market to experience price escalations due to the increasing consumer/investor confidence which will, in turn, spur residential property demand, and therefore price inflation.
This means that now is the perfect time for investors to look at adding to their property portfolios.
“When investing in property at the bottom of the cycle, investors stand to gain the most in terms of long-term growth. Investment-based residential property purchases are an ideal investment option in any economic climate,” says Renecle.
“Being on the brink of the best potential for property value growth South Africa has experienced in recent times, savvy investors would do well to explore property investment options in key business nodes such as Rosebank and surrounds, as these types of property will generally always have the highest rental demand and capital appreciation potential.”