How long will Ramaphoria last in the South African property market?
When Cyril Ramaphosa took the reins of power, many have been wondering how this will affect our economy and property market? So far, the market reaction has been largely positive but will it last for the months to come? We take a look of at what the rest of the year might have in store for us.
How long will Ramaphoria last in the South African property market?Â
The economy improved markedly under South Africa’s newest president, Cyril Ramaphosa. When he took office earlier this year, the county was on the brink of another downgrade by ratings agency Moody, however, Ramaphosa enacted a series of pledges that helped the economy avoid that fate. These included reigniting economic growth, rebuild investor confidence and tackling corruption within the ruling party, all of which have proven successful to such an extent that the rand strengthened against major international currencies, inflation stabilised, and the Reserve Bank cut the prime lending to its lowest in two years.
The prospects of economic recovery enabled the property market to start the year on a relatively strong footing. The FNB Estate Agent Survey reported greater activity in the market in the first quarter of 2018, after a 3-quarter decline. Banks have been buyer-friendly, offering home loans 6,05% higher than it was 12 months ago. And, the average time home owners were able to sell their home improved to 14 weeks and 1 day from 17 weeks and 2 days.
But, will the upbeat sentiment continue to help bolster the market forward, especially in the face of new challenges such as land reform, the VAT increase and rising fuel prices? According to FNB property strategist John Loos, the level of house price inflation is likely to increase to about 5.9% in 2018 on the back of improved sentiment and confidence in the country, up from real property price declines in 2017 and 2016. Property analytics company, Lightstone, believes that the price growth on properties for sale will remain in safe territory, anticipating growth nationally of around 4%, with lower-value properties will perform better than the luxury market.
While the property market looks to end the year on a positive note, in part thanks to Ramaphoria, we’re just starting to pick up the pieces, and in order for the market to fully recover, we need greater political and economic stability.
