Challenges facing the property market have resulted in a flat outlook for the rest of the year, but buyers can get a great deal in the current environment.
In a press release by Samuel Seeff, Chairman of the Seeff Property Group he is quoted saying: “Like everyone else, we had hoped that the technical recession would be staved off so that we can get to the next growth phase, but these along with the many factors which influence the economy, are beyond our control.”
Land expropriation and other challenges
The challenges are deeper than anticipated on top of recent global and emerging market pressures. Seeff said that the lingering issue of property expropriation has been an added challenge, and in this regard the group welcomes the clarity provided by President Cyril Ramaphosa in parliament and in meetings with the UK Prime Minister and Chinese President along with high level meetings with agricultural bodies and stakeholders.
It is important for consumers, sellers and buyers to filter out the noise and misinformation and focus on facts including that nobody is coming to take your house. It is still safe to invest in property. The President has been clear that there will be no wide-scale expropriation or nationalisation, property rights will be protected, and illegal land grabs will not be tolerated.
Things have been worse
While the property market is in a downward trend, Seeff said that it is by no means the worst market that he has seen in over 30 years in property, and it is nowhere near the lows of the 2008 Global Financial Crisis. In 2009, the Seeff Property Group for example experienced a decline in sales of 25% year-on-year. This year, we are only down by 5% year-on-year. Perhaps, he added, we just tend to measure the market against the boom-phase performance rather than the average performance.
All economies and markets go through phases and what we are seeing now, is all still part of the fall-out of the Zuma-administration and poor economic and political decisions. South Africa, the economy and property market have always had to deal with challenges, from the political instability of the 1980s to early 1990s, high inflation and interest rates of up to 16%-25% at times.
Seeff added further that the two main factors which drive the market, is sentiment and the interest rate, which, at 10% is still at some of the best levels in three decades. The banks are also still lending and home loans granted is in fact up year-on-year. The flat price growth also favours buyers.
Buyers and sellers should be realistic
What is important, according to Seeff, is that buyers and sellers adjust to the new market realities. Deeds office data shows that thousands of property transactions are concluded monthly. That said, there is no doubt that the buyers’ market is here to stay for the rest of this year and perhaps well into next year. This however, by no means signal that there are no opportunities for sellers, far from it. There is a market for well-priced properties and sellers need to guard against holding out for unrealistic prices, because it will take time for the market to take an upturn.
History has shown that South African property prices have generally tended to outperform economic growth, and there many stories of buyers who will tell you, if only they had bought during a particular time. It is always by looking back that you realise you should have bought, or you should have sold. It is still safe to invest in bricks and mortar and with such a beautiful country, a lifestyle without compare and still very affordable living by international standards, there is no reason to wait, it is time to buy and invest in South African property.