Weekend Argus (Saturday Edition)
State of property market depends on ANC’s top echelon, say experts
THE POSTPONEMENT this week of President Jacob Zuma’s State of the Nation Address (Sona) has been welcomed by the property industry, which is heavily reliant on political and economic stability.
Because the address will set the tone for the country’s economic performance this year, it is vital the ruling party leadership sorts out current volatility before a new date for the Sona is announced, says the industry
The decision to postpone has created uncertainty about whether Zuma will be recalled or will resign, but Erwin Rode of Rode & Associates says directly held property is not affected by short-term uncertainties.
This is in contrast to listed shares, where speculation plays an important role during crises. This means should Cyril Ramaphosa become president of the country soon, the effect on the housing market “would be nil”.
“However, should it become evident that Zuma will try to hang on until the elections in 2019, there will be a negative effect on the economy and, therefore, prospects for the property markets. It must be understood that sentiment plays a role in investment decisions, and a country that does not invest for the long term will decay.”
While the country does, however, need a clear sense of direction from the ANC’s “top management”, and quickly, Adrian Goslett, regional director and chief executive of Re/ Max of Southern Africa, says the postponement of the Sona was “the right decision”.
“It is imperative the leader of the country speaks with a united voice and gives citizens, and investors, the assurance the ruling party has a plan and the resources to not just get us out of this economic mess, but further on the road to growth.”
Goslett does not believe the delay will have any direct effect on property prices, adding it was “half anticipated” due to uncertainty within the ruling party.
“On the other hand, whoever makes the speech may have a positive or negative effect on consumer sentiment, which has an impact on buying and selling patterns.”
While the postponement of the Sona is unprecedented, Samuel Seeff, chairman of the Seeff Property Group, says he trusts it was done with the aim of creating a stable environment in which to deliver the address.
“Economic and political stability is absolutely vital after two years of instability, during which the country suffered a number of economic setbacks, including credit downgrades.
“The government and the ANC now have a unique opportunity to capitalise on the positive sentiment by taking the right steps and making the tough decisions necessary to get the economy back on track.”
Seeff says he is encouraged by the recent hard work done by Ramaphosa and his team attending the World Economic Forum at Davos, and hopes Sona will carry a message of tough action regarding corruption and wasteful expenditure.
At the same time it will send the message that an investor-friendly climate is being created to give them and entrepreneurs a reason to invest in South Africa.
Lew Geffen, chairman of Lew Geffen Sotheby’s International Realty, believes that until Zuma is out of office, domestic investor confidence and trading of large assets will slow down.
“The ANC is trying to do this the easy way for themselves so that no individual is responsible for ‘pushing’ Zuma out. There is no doubt the opposition will call for a vote of no confidence if he does not go, and this time they’ll get the support to carry the motion. It is evident that South Africa’s economy will not turn around until Zuma is gone.”
Chris Tyson, managing director of Tyson Properties, believes “a process has been started and South Africans need to be patient. South Africa has an under-valued currency and a stable property environment.
“I believe the country is on a new path. We are optimistic about the year ahead, with January showing renewed interest in the market as a whole.”