South Africans voted in the general election on 29 May, delivering a historic result in which the African National Congress lost its majority for the first time since 1994. What does it mean for the real estate sector?
In the short term, it’s likely to boost the housing market, say property industry experts. Commentators noted a market slow-down ahead of the vote, putting it down to political uncertainty, but said they expected it to bounce back quickly. In the event, the election returned no absolute majority, so some uncertainty remains while coalition talks are under way.
How could the housing market change post-election?
The residential rental sector wasn’t a major campaign issue in an election dominated by unemployment, inequality and load shedding.
Even so, some experts have pointed to possible indirect effects on the sector, especially at the provincial and regional levels. Rhys Dyer, CEO of ooba Group, said “the regional and provincial ballots will have the greatest impact on residential property values, as these ballots determine who will govern a local municipality and be responsible for service delivery”.
Without flagship housing policies on the table, the biggest influence on the housing sector is likely to come from the South African Reserve Bank, not Parliament. On 30 May, SARB once again held interest rates steady at 8.25%. The repo rate has now been at a 15-year high for over a year, putting off prospective homebuyers.
However, the Monetary Policy Committee’s statement was the most positive one for a while, suggesting that interest rates should ease by next year. SARB now expects to bring inflation to its target level of 4.5% in the second quarter of 2025, whereas previously this was only forecast for the end of 2025. At the same time, the Bank says uncertainty is still high, while there are risks threatening the country’s growth outlook.
An easing of interest rates is likely to boost housing market activity – when it happens. Meanwhile, these more positive statements from SARB along with any good news on growth, inflation, load shedding and more could also help restore confidence and encourage buyers.
