Expectations for the post-election property market
With elections behind us, all eyes are on the South African economy to see how the results will impact future stability and growth.
The importance of the 2024 elections cannot be understated, with some voters waiting for over six hours just to cast their vote.
While remaining cautiously optimistic for how the South African property market will perform in the year ahead, Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, notes that persistent challenges such as high unemployment rates, high interest rates, the risk of load shedding, and political uncertainties could temper growth. “The next two weeks are crucial for SA’s democracy and economic future. Coalition partners picked in the next few days will determine foreign and local investment sentiment and may well determine the trajectory of the economy over the next few years,” he comments.
He goes on to explain that immediately after elections, the property market may experience some short-term volatility as investors react either positively or negatively to the new political landscape. “However, long-term stability and growth depend on the elected government’s ability to implement effective policies and make good on any pre-election promises,” Goslett notes.
Elaborating on this, he explains that owing to the uncertainty that builds around election time, many investors prefer to keep their finances liquid until the future of the economy becomes more stable. “It is widely perceived that policy decisions tend to be more favourable leading up to an election and can change post-election. Investors, both foreign and local, are therefore likely to wait a few months both leading up to and following an election period to see if any policy changes come into effect that might affect their return on investment,” he explains.
Unsure of how citizens will react to the election results, Goslett adds that foreign investors also tend to adopt a ‘wait and see’ approach when it comes to investing until they can be more certain of political stability in the country.
Apart from the political concerns, the South African Reserve Bank’s stance on interest rates will also play a crucial role in how the property market will perform in the months ahead. “High interest rates make borrowing more expensive, discouraging property purchases and investments. High inflation can erode purchasing power and affect property affordability. If risks to inflation are not managed well, then this will have a negative impact on the local housing market,” Goslett explains.
“The post-election property market in South Africa will be influenced by a combination of factors and investors will, no doubt, be watching closely for signals of stability, economic growth, and clear policy directions to gauge their confidence in the market. That being said, the South African property market has proven resilient time and time again, and I remain confident in the fact that real estate will always be a safe long-term investment strategy,” Goslett concludes.
Writer: Kayla Ferguson
