“Wait-and-see” may not be the right strategy right now
Category Blog
“The news that President Cyril Ramaphosa is to push ahead with plans for a fiscal stimulus is the best news to come out of the Union Buildings since Jacob Zuma resigned.
“The Zuma era has been more deeply damaging to the economy than any previous exogenous shock, and has left SA in a position far worse than when the great recession hit in 2008” - Carol Paton (in a recent Business Day column).
Succinctly put – and right on the button. Not least from a residential property market point of view.
Most of us will not have forgotten the 2008 market downturn. It set in after a long bull run which began in 2001. Property prices soared from 2001 to the end of 2007. Then in 2008 came the financial crisis when property prices dropped by 15% and flatlined more or less for the next 10 years.
The Zondo Commission
However, unlike the current economic downturn in South Africa, the 2008 crisis was not self-inflicted.
This is being made perfectly clear by the revelations that have been seeping out of the current Zondo Commission of Inquiry into State Capture – and, not least, by way of input from the country’s major banks.
What home owners, buyers and sellers are confronted with now is the type of cyclical adjustment that has come and gone over and over again in the history of the South African homes market.
It’s just that this one is far less attributable to negative economic factors.
The State Capture issue has probably been the biggest dampener that has hit the South African residential property market since democracy. But this, too, will pass in time.
In the meantime, there is a pent-up home-buying demand out there which is seemingly biding its time until the cloud of uncertainty that continues to overhang the homes market begins to lift.
Avoid doom talk
I have said this before in a downturned, and subsequently flat-lining, homes market, and I have no hesitation in repeating it in the prevailing circumstances:
If, as a seller, you are concerned about the current home price scenario, don’t listen to doom talk. Look at how much capital you put into your home originally, and how that has grown. Ignore the bond. We all have to live somewhere, incurring a cost – irrespective of whether we own or rent.
If I was a buyer, on the other hand, I would be careful, but not overly hesitant. Look around and research the market thoroughly. Particularly while there’s no pressure, as there will be around the corner.
Buying a home is a lifestyle process. If you see a home that really fits your lifestyle, and your family needs, act now. You will be buying at a discount anyway.
Finally, it is encouraging to see the rand improve on the back of the positive reception Ramaphosa received from his presentation of the ‘fiscal stimulus package for South Africa’ that he presented at the United Nations this week.
Author: Ronald Ennik
