How politics influences the real estate market.


South Africa has never lacked behind any country when it comes to political turmoil. This political situation has influenced everyone and almost everything in the country, so how has it and will it influence the real estate market.

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Looking back to 1994, when the first democratic elections took place, the hype that was created on a social level ensured the emigration of thousands of South Africans. Due to this the Real Estate market became a complete buyers market, homes was sold next to nothing as sellers just wanted to get rid of their homes and emigrate.

To date emigration does play a factor in selling when political turmoil arises. Due to this factor investor confidence do take a battering as the political situation has a negative impact on economic growth.  In recent history stats has shown that the number of sellers selling due to emigration has doubled. This is mostly due to political instability. 

Factors that should are also influenced by politic indirectly is things like rising inflation due to global food and oil prices and which decreases the monthly disposable income. This all leads to a rising household debt-to-disposable-income ratio.

Even though we have seen some ups and downs in the real estate market during the years since the first democratic elections, the future still currently does look bright. Recent stats has shown that black buyers has made a big entrance into the market and that almost half of the home loan applications now comes from black buyers a very long way from the only 12% it contributed a decade ago. This could be because of many factors, one of the main influences could be BEE. This has been part of South Africa for many years now, but the increase in bond applications show that black buyers are now more confident in investing in property and have better job security than before.

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“This is a very positive sign for the real estate market and we hope that this continues. We  have seen major changes over the years in the real estate market, from an absolute jump to some really lows as well but the entry of new buyers into the market are surely welcomed,” says Craig Hutchison CEO of Engel & Völkers Southern Africa.

 Also the role politics plays towards foreign investors are immense. Any political instability with in South Africa causes potential international buyers to retreat and this also causes buyers to drop their prices immensely. One concern that also plays a big factor is the land reform situation. This is one of the major concerns for buyers looking at farm properties and these properties have been attracting a lot of international attention as a lot of them can generate some income to the buyer. With land reforms being called for those international as well as local buyers stay hesitant when investing in South African properties.

Not only does South African politics influence the real estate market but neighbouring countries political situation can easily spill over into South Africa. Zimbabwe has for long had political problems and this directly influences any potential investments both locally and internationally.

“There are quite a number of negatives when it comes to the influence that our politics have on the real estate market, but we continually see great improvements in the market, not only from local buyers but internationally as well. Engel & Völkers have a very large international referral system and we have seen some real interest from international buyers especially from Germany and other parts of Europe,” Craig concluded.  

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Comments
3 Responses to “How politics influences the real estate market.”
  1. Darn right. It is really hard to make it with government controls and decontrols.

    Thanks.

    http://www.centurionfinder.co.za/article/pricing-property-for-rent-in-centurion/

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  1. […] is the original post: How politics influences the real estate market. « Engel & Völkers SA … Posted in Property Articles | Tags: africa, better-job, black-buyers, bond-applications, […]



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