Whatshot
Political landscape does impact the economic performance of the country and the future expectations of home buyers
Political landscape does impact the economic performance of the country and the future expectations of home buyers
Author: by Andreas Wassenaar
Date: 2024-04-26
Date: 2024-04-26
Does it make sense to delay property-related purchase decisions until after the anticipated general election planned for 29th May 2024? What impact, if any, does the political landscape have on the trends of the property market? These are all very good and frequently asked questions.
As South Africans, we are astutely aware of the integration of politics and economics and how hard it is for a city, region or even country to excel without the active support and engagement of the various political agencies and influencers.
As a KZN resident, we have witnessed how impactful extreme events such as the politically inspired and ignited riots we experienced in July 2021 were. We also, soon afterwards began to understand the impact of extreme weather on property prices as Umdloti was particularly ravaged by the floods in April and May 2022. Had the local authorities had the ability to quickly respond to the devastation of this event the impact would have been contained.
Their failure, however, made us all aware of the level of dysfunction and lack of maintenance that has been evident for so many years. And yet, even with so much stacked against us, South Africans remain remarkably resilient and able to bounce back from potentially devastating events.
People have voted with their feet and migrated en-masse to those areas, such as the Western Cape, that have demonstrated a high level of municipal and security management. This demand has supported property prices while in areas such as KZN and Gauteng, which have not experienced the same levels of demand, property prices have retreated.
Whatever the outcome of the final ballot count after the May election, the underlying economic drivers are what ultimately lead to demand for properties. We must accept that the political landscape does impact the economic performance of the country and the future expectations of home buyers, but that being equal and in the absence of any further extreme events, the interest rate cycle and ability of local authorities to function and perform their basic tasks is what will drive demand for specific suburbs and regions.
The North Coast of KZN is fortunately dominated by large private estates which have largely privatized the security and supply of services and in doing so at least built in a level of resistance to municipal services that stop working. Other areas that rely completely on the municipal supply of water and electricity have found these services badly compromised and hard to cope with.
While there remains a level of uncertainty, astute property investors will take the opportunity to negotiate lower prices, which may firm up post-election. Many South Africans who have been through the past few election cycles will most likely that a view that it will be business as usual from June onwards and that what matters is the cost of money and the ability to raise mortgage finance. With the interest rate cycle predicted to edge downward in the second half of this year we can be reasonably confident that demand for property will increase regardless of the election outcome.
