A new cycle of growth in SA homes market
Category Blog
Historically, the residential property market in South Africa has moved in three-year cycles for roughly 60 years. That was until we entered the lively boom period which began in 2000.
That upturn lasted about seven years. It was the strongest property price growth cycle in modern real estate history in South Africa.
It began to crack in December 2007, about six months before the demise of New York-based Lehmann Bros triggered the start of the subsequent world financial crisis.
It was not long afterwards that the South African homes market entered a prolonged period of price flat-lining. It has virtually persisted to this day.
In 2008, our country’s socio-political/economic climate was under strain. Interest rates were up at 15% and the global oil price was over R160 a barrel. Furthermore, the restraining effects of the then new National Credit Act were beginning to bite.
A new era
Now, as South Africa enters a new era under the presidency of Cyril Ramaphosa, the sentiment pendulum is at last starting to swing the other way –albeit slowly at this stage.
The question is: Why is history not yet repeating itself in South Africa this time around? Why are home prices not appreciating as vigorously as may have been expected – given that interest in residential property investment is on an uptrend?
One of the reasons is that foreign investors are seemingly holding back because of uncertainty about land tenure.
Questions about land redistribution – and the basis of its inevitable implementation by Government – are at the top of their considerations about whether or not to invest in South Africa.
It is a controversial issue. And it has been dampening the home market’s ability to bounce back strongly. Many potential South African home buyers have probably been locked in the same mindset – at least for the time being.
What is clear is that the tide is beginning to turn. The market seems set at last for an up-cycle, which may only really be noticeable towards the end of 2018.
The passing of Pam Golding
Pam Golding was the ‘Grande Dame’ of the South African residential real estate sector. News of her passing, at the age of 90, was a sad milestone in the history of our industry.
A role model in the manner in which she presented herself, Pam instilled instant trust and confidence – qualities that are not easily established in the realms of real estate marketing.
I had the privilege of working with her for 21 years – helping to build and develop the roll-out of the Pam Golding brand into the Johannesburg market.
They were halcyon days. I remember them fondly.
Author: Ronald Ennik
