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#CabinetReshuffle does little for a housing market under pressure – Seeff

deck of cardsExpect the unexpected and prepare for a challenging time ahead; that is how we prefaced the year. Caution has been the order of the day for the last two years as we have seen political instability and poor governing decisions negatively impact the economy.

Seeff chairman, Samuel Seeff.

Seeff chairman, Samuel Seeff.

We are on record as saying that for a good property market, you need a good economy. Even just a slight economic uptick tends to reflect very positively in the property market as we witnessed during the mini-boom of 2013 to 2015. The property market, as with many other sectors, is an important contributor to the economy and to wealth creation.

Since late 2015, the property market has been weighed down by the poor economic outlook, driven in part by political instability. Pravin Gordhan’s time in office brought stability, staved off a downgrade to junk status, the rand regained some strength and the interest rate remained stable for the last year.

We started off 2017 with economists pointing to a potential upturn for the economy and property market. FNB’s recent Property Barometer started pointing to a potential settling down of the property market and a possibly better outlook for the year.

Since Monday this week we’ve seen renewed instability creep into the economy with the rand under pressure on the back of the recalling of Pravin Gordhan from the overseas investor roadshow. Following last night’s announcement of a major Cabinet reshuffle, we woke up this morning to a rand in free-fall and economists beginning to renew talk around a sovereign credit downgrade.

There will be an inevitable effect on the economy and property market. We are still sitting with a market under pressure with overall volumes and prices down, save for the Cape that continues to hold out better compared to other metros.

While we will need to wait and see how this Cabinet reshuffle will affect the economy and property market, we have seen the effect of poor political and economic decisions on the market since late 2015. We are therefore very concerned that this decision has come at a time when stability is so vital.

As it is, consumers and homeowners are under severe pressure, costs are rising and the higher taxes that have come into effect will lead to further costs rises. Today, we see the return of the threat of a credit downgrade which is a direct threat to the country’s economic wellbeing and will have direct consequences for the property market – interest rates and costs will rise, more people will default on their home loans and fewer people will be able to buy houses, especially the lower income earners.

It is a time of caution and consumers, homeowners and buyers need to factor this into their decisions and household budgets.


Samuel Seef is the chairman of the Seeff Property Group

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