Property set to shine in South Africa

 ·18 Jun 2024

South Africa’s new Government of National Unity (GNU) is set to boost the property sector.

The ANC has lost its majority in parliament for the first time in the democratic era, winning just 40% of the national vote.

Thus, the party has formed a GNU with support from the Democratic Alliance and Inkhata Freedom Party (IFP).

The parties confirmed in the GNU have roughly 65% of the South African vote and, with help from the National Freedom Party (NFP), were able to create governments in the highly contested provinces of Gauteng and KwaZulu-Natal.

Lew Geffen Sotheby’s International Realty CEO Yael Geffen said that the ANC signing a GNU deal with the DA-dominated coalition is “the most selfless and mature decision” that the party has made since Jacob Zuma became President in 2009.

“The good news is that as a people, as a nation, we can now look to a future that contains a real prospect of prosperity for everyone, rather than just the few that we have seen since mid-2009,” said Geffen.

“The pillaging of our State assets will take time to die, but the checks and balances that should have been in place years ago will start being enforced, and the culture of corruption will wither in the years to come. That gives us as a country and an economy a chance to grow and prosper.”

She added that the news will boost international investor confidence in South Africa’s future and, in turn, the property market in the mid-term.

“The outlook is certainly more positive than it was a month ago,” she said.

Interest rate hopes

Stephen Whitcombe, MD of Firzt Realty, added that the GNU might even cause interest rates to decline earlier.

“Lower interest rates would, of course, boost the property market by making home ownership more affordable and making it easier for prospective buyers to qualify for a home loan,” said Whitcombe.

“However, to get there, we need increased investor and consumer confidence in the future of the country and its economy, and the renewed confidence created by the GNU agreement was clearly indicated by a 1,6% jump in the JSE Africa All Share Index last week and a 3% increase in the value of the Rand.”

“If this continues now as we expect, the Rand will strengthen further, the inflation rate will fall, and the risk of imported inflation will decrease, all of which may well encourage the Reserve Bank to start cutting rates within the next few months and making life easier for millions of SA consumers while hopefully lifting economic growth and stimulating job creation.”

He added that many home buyers and investors were hesitant to commit until the election outcomes were confirmed but will now proceed with their purchase plans, and banks are also keen to lend.

Even at a municipal and provincial level, it is believed that the GNU partners will now have the capacity to tackle issues such as homelessness, potholes and outages caused by old and crumbling water and electricity networks, previously hampered by political infighting and unsustainable coalitions.

“Consequently, we are confident that this year will turn out to be a better one for property than the industry was expecting and that home values will increase in real terms,” said Whitcombe.

Read: South Africa’s big plan for state-owned companies hits a wall

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