“South Africa still offers the most fantastic (and yes, the toughest) opportunities for those with the will to pursue them. The government will bring change, but South Africans will adapt and find ways to circumvent them in the long term. And there is no place for a more beautiful, more fight-worthy Earth than South Africa.”
Marcel du Toit, CEO of Leadhome
I recently tweeted the above in response to a social media post referring to South Africa as a “failed state”. Yes, we need meaningful change, but we South Africans are hardworking and tenacious; we find the opportunities; we create solutions that bridge the gaps between society and government. So many South Africans have fought so hard for progress, and so many smart entrepreneurs have built phenomenal businesses. The reality is that there are so many opportunities here.
I find it very encouraging that President Ramaphosa is becoming more and more pro-business. In his State of the Nation address earlier this month, he made it clear that he was looking to make the business environment friendlier and easier to get into. This, of course, will have positive spin-offs across the spectrum. With more investments, more money circulates. As money flows, the economy shifts into high gear and consumers feel more secure.
Upward movement of the market
At Leadhome, we can see that all of these factors will come together to drive the real estate sector in the medium term. Due to low interest rates, we have already seen upward movement in the market over the past two years, and we have also had a positive start to the year – our busiest January ever. time. It is clear that people feel more secure in their jobs.
We also expect growth for the rest of the year. From a national perspective, we expect growth to be similar to 2021, at around 3.5-6%. And, like last year, we expect this growth to be concentrated in the hotspots of Joburg and Pretoria, with ‘semigration’ fueling growth in Cape Town. In fact, we are already seeing high valuations in Cape Town, indicating that buyer demand is high and sellers need to be careful to price their properties appropriately.
Growth in Pretoria and Joburg is being driven by the economic recovery, which is helping first-time buyers enter the property market and allowing existing owners to upgrade as their LSMs increase. Purchasing decisions are also still influenced by Covid. Before the pandemic, our homes were places of refuge, but the way we interact with our homes has now fundamentally changed. They are now also a workplace and consumers are looking for more space to accommodate working from home. Additionally, many people don’t commute to work as often as they once did, and many households carry over what they save in fuel costs into their home and bond budgets.
Fairly friendly budget speech
This positive growth outlook was bolstered by the finance minister’s decision to avoid tax rate hikes in his recent rather friendly budget speech. From a real estate perspective, no changes to transfer taxes will help offset any negative impact from the recent increase in interest rates, and no changes to capital gains tax also benefit sellers.
Anyway, I think it’s fair to say that the world is changing. Russia’s devastating invasion of Ukraine is a stark example of this – which may actually prompt South Africans to reconsider immigration and invest more in South Africa. What we realize is that there is a better way to live and for now the South African economy is supporting the adoption of property, both as an important asset class and also as a catalyst for a better way of life for South Africans.
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