GNU holds promise of a better year for real estate

The property market in SA will undoubtedly benefit from the successful formation of a Government of National Unity (GNU) following the election results earlier this month, which caused much anxiety among both consumers and investors.

So says Stephen Whitcombe, MD of Firzt Realty, who foresees that interest rates might even start to go down earlier than expected as the result of the agreement to form a GNU that was announced on Friday 14 June, and can already be seen to be working at metro, provincial and national level.

“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. 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.”

Meanwhile, he says, many home buyers and investors who have been hesitant to commit until the outcome of the elections was clear are now already deciding to go ahead with their purchase plans, aided by the fact that the banks are still keen to lend.

“Despite the fact that it is early days for the GNU, there is also a widespread belief that the parties involved so far are genuinely committed to co-governance and have a good chance of achieving the objectives outlined in their agreement, which include reducing poverty and inequality, increasing economic growth and employment, creating a professional and merit-based public service, taking strong action against crime and corruption and improving education and healthcare.

“At municipal and provincial level, especially in Gauteng, it is also believed that the GNU partners will have the capacity now to tackle and actually solve issues such as homelessness, potholes and outages caused by old and crumbling water and electricity networks. This work has previously often been hampered by political infighting and the collapse of unsustainable coalitions, but the GNU definitely promises something different.

“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.”

Issued by Firzt Realty