The Ramaphosa effect in real estate
Now that Cyril Ramaphosa has been elected the next president of the South Africa, there is little doubt that his economic reform – one of the major focuses on his agenda – has been beneficial to the property sector. Here’s a look back at what his accomplishes meant for real estate.
The Ramaphosa effect in real estate
Every four years, politics and real estate come together as a new president takes over the reins and property developers and investors try to figure out how the change in political climate will affect them financially. A look back at history shows that presidential election cycles indeed impact how the property sector performs.
With Cyril Ramaphosa, that was no different. No sooner than two months into his presidency, the economy took turn for the better. The rand made some major gains against the dollar, South Africa staved off a downgrade by Moody’s and the Reserve Bank cut interest rates by 25 basis points.
Ramaphosa’s economic approach seemed to have worked and for the property market this meant only way – forward. With a return to more normal market conditions during the first quarter of 2018, buyer sentiment toward properties for sale remained positive. It was reported that houses spent less time on the market in the 1st quarter of 2018, declining from the previous quarter’s 17 weeks and 2 days to 14 weeks and 1 day. Banks were also more willing to grant home loans, making it easier for buyers to get onto the property ladder. Statistics have shown that the average approved bond size at the time was 6,05% higher than it was 12 months ago.
Until we know what the outcome of current political and financial difficulties such as Land Expropriation Without Compensation, higher VAT and increasing fuel prices are, the future of the property sector market remains uncertain. However, there is no doubt that for now, investing in property is considered a positive thing given that the house price growth rate continues to accelerate mildly.
