SA HOMES MARKET HAS SEEN WORSE TIMES
Category Blog
Don't panic. Price realistically. And accept that deals will almost inevitably close with a degree of price discomfort for both buyers and sellers.
The property market been in worse situations before - and has always rebounded. For those who may have forgotten, interest rates peaked at 25%, in January 1985; inflation nudged a record high of 21% a year later; and nominal house prices declined by 10 per cent in the same time frame. It happened against a background of extreme uncertainty. Townships were in turmoil under apartheid rule. Bomb blasts and other forms of violence had taken hold. A government-declared State of Emergency was in place. And the doom merchants were packing for Perth and other perceived safe havens abroad. At the same time, the rest of the world tightened a disinvestment and economic sanctions campaign that thrust South Africa into total isolation Market recovery.
It all came together as arguably the worst scenario the SA homes sector had ever faced. Yet the market bounced back, as always - and later went on to record its biggest-ever bull run.
Interestingly Cape Town was cheaper than Joburg in those days. How well did it that bounce back? Historically, going back 40 years, residential property - particularly in prime suburbs of major cities like Johannesburg - has been one of the best hedges against difficult socio-economic and political conditions such as the South African economy now faces. Whether it be in Lagos, Luanda, Dar es Salaam, Nairobi - or even Harare - upmarket homes in prime areas in most African cities hold their values well through peaks and troughs in spite of the turmoil they face from time to time.
We are now surely coming to the end of the longest property value downturn in memory. Values are extremely low. And 2024 will be the beginning of the turnaround. It's difficult to imagine prices normalizing but they always have in the past.
Author: Ronald Ennik
