PREDICTIONS FOR THE HOUSING MARKET POST-ELECTION
South Africans were able to cast their vote at polling stations across the country at the 2019 National elections on 8 May. According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, this day holds the potential of being the turning point around which the housing market will begin its long-term recovery.
“Owing to the uncertainty that builds around this time, many investors prefer to keep their finances liquid until the political and economic future becomes more stable. The uncertainty over this period centres around the policy decisions both pre- and post-election, as it is widely perceived that these decisions tend to be more favourable leading up to an election and can change post-election. Investors, both foreign and local, are therefore likely to wait a few months both leading up to and following an election period to see if any changes come into effect that might hinder their return on investment,” Goslett explains.
“Now that the people have had their say in deciding who they want in charge, it is up to the newly elected government to follow through on the promises made building up to the elections. If they execute on these promises and create more stability, ratings agencies may be inclined to look more favourably on the country which would be the lead indicator for increased foreign investor confidence, which in turn will lead to economic growth. Should our leaders not follow through on promises made, it will have the reverse effect. Ultimately, the ball is in their court. It is therefore unlikely that the market will see any immediate or substantial changes until the election hype has subsided and investors have more confidence in the policy decisions made by the elected government and its cabinet,” says Goslett.
In the short-term, it is therefore likely that the housing market will continue much the same as it has been in previous months. As at the end of March 2019, Lightstone Property’s Forecast for 2019 revealed that the national house price inflation index was at 3.4 %. Annual consumer price inflation increased to 4,5% in March 2019, pointing to real house price decline of 1.1%. What’s more, Lightstone Property predicted three different scenarios for house price growth for the year, their most likely outcome being a 3% house price inflation rate for the year. However, their high-road scenario places house price inflation at 4.5% for the year, which would possibly beat inflation if we contain the upward risks that threaten its stability.
“From a personal perspective, I am confident that the property market will deliver strong long-term returns following the elections, so much so that I am not only going to hold onto my existing property, but am also looking for additional properties in which to invest in order to purchase while prices are still low and reap the rewards of the long-term price appreciation which I believe is to follow. I also believe that buyers who enter the market now stand the best chance of maximising returns if they are willing to wait for the ensuing price curve,” Goslett concludes.
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