Real estate ends 2019 on stable footing
Category Property news
The South African economy and to some extent, the real estate sector has experienced promising, positive movement in the second half of 2019 following a slowdown in markets over the past year. The country's emergence from a technical recession has demonstrated the resilience of the Cape property market as South Africa's go-to property market for domestic and foreign buyers. The encouraging market sentiment also bodes well for the country to avoid a possible debt rating downgrade when Moody's reviews the economy in November.
Mike Greeff, CEO of Greeff Christie's International Real Estate shares his views on South Africa's economic status quo, "All in all, I am very encouraged by the tenacity of the South African economy, the Cape property market and the citizens of our country. We have all felt the significant pressures of the past year and I feel that we have weathered the worst of the storm. Markets have slowed their decline and for the moment are relatively stable, the country has safely come through a technical recession, the political landscape is stable, and economists are feeling cautiously optimistic about the year ahead provided there aren't any nasty surprises for the economy in 2020. The property market is one of the mainstays of the economy and is an effective indicator of market sentiments. I would encourage potential buyers and investors to act now as we are in a buyer's market and buyers should take advantage of current market conditions."
The Cape property market has historically been characterised by double-digit growth potential, high demand and outstanding return on investment. While recent years have seen a slowing of the trend, it is certainly not an indicator of doom and gloom. Investors can still look forward to returns that are still above the national averages and comparable to other major cities across the world. The South African economy has also emerged bruised but not broken after navigating treacherous conditions over the past 18 months.
A significant milestone for the nation was the successful completion of the general elections in May. The elections went off smoothly and gave reassurance to local and international observers that the country has a functional democracy. The implementation of legislation to combat corruption as well as decisive investigations into state capture are further indicators that South Africa is a viable trade and development partner.
South Africa's Monetary Policy Committee (MPC) has also been under scrutiny over the course of the year with their decisions being analysed by every sector of the economy. The MPC's decision to first cut repo rates and then keep them stable demonstrates a comforting level of confidence in the economy as well as a healthy dose of level-headed realism. The committee's decisions have taken the country's inflation targeting into account and are cognisant of external factors like the oil price as well as cyclical spending trends over the holiday periods.
The real estate sector can expect to reap the rewards of the upturn as more first-time buyers enter the market and take advantage of favourable lending rates. This is also true of foreign investors that have the benefit of relatively stable interest rates as well as a good supply of available stock to choose from. This unique combination of internal and external factors has placed South Africa in an excellent position to enter 2020 with an optimistic stride.