The generally market-friendly election outcome will in all likelihood create a degree of certainty and stability and go some way towards addressing the issues currently affecting confidence in the South African economy, says Dr Andrew Golding, chief executive of the Pam Golding Property group.
This stability should have a positive effect on the South African residential property market, he said.
“Since 1994 we have consistently seen an acceleration in house price growth in the months after a general election.
“While It is anticipated that, in the wake of the favourable election outcome, the residential property market will rebound, in reality, any significant recovery is only likely to materialise in the later stages of the year after the seasonally quiet winter months.
“Furthermore, while It is fair to say that the post-election environment is likely to be better for the property market generally, a number of specific questions arise, including how the land reform question will play out in terms of policy amendments or variations and also whether or not other market-friendly reforms are introduced,” he said.
Golding said that casting a general market view over the entire market is often not necessarily advisable or accurate – as different provinces, regions, cities and sectors perform differently.
“For example, there is a shortage of accommodation for students and retirement developments in different parts of the country. As a result, activity is likely to be brisk in these market sectors despite the subdued conditions in the broader national housing market,” he said.
Looking ahead, Golding said that household incomes are likely to remain under pressure in the short term – with continued petrol price hikes (including the introduction of a carbon tax in June) and a large percentage of renters and buyers coming to the market for the first time.
This means that the lower end of the market is likely to continue to hold up well relative to other sectors of the market, he said.
Smaller sectional title properties will also perform better as a result since this sector is often favoured by students, first-time buyers and down-scalers.
“These sectors of the market would also be those that would benefit most from a rebound or turnaround in the economy,” said Golding.
“First-time buyers are typically most sensitive to prevailing economic conditions and are a strong potential source of demand for the market. In areas where market price corrections have improved the perceived affordability of a property, it seems time on the market is declining and buyers are showing a willingness to purchase.”