Category General News
Following the September news that South Africa’s economy has slipped into a technical recession – when a country’s GDP suffers two consecutive quarters of negative growth – it is still unclear precisely what this means for the local property market.

For the most part, the drop in employment and wages due to a recession leads to a buyer’s market; where available properties begin to outgrow potential buyers. However, this is not always the case, and when a recession hits buyers as hard as it hits property owners, it can also diminish the number of potential buyers.

Furthermore, the interest rate has a crucial role in the property market. Investec chief economist Annabel Bishop said in an interview with Fin24 last month that at least one interest rate hike should be expected from the SARB before the end of the year. Further affecting this hike is the influence of the domestic currency, which of late has not seen significant growth. Although the effects on the property market may not be immediately apparent, forecasts point to continued slow performance for the remainder of the year with some indications of slight improvement in the coming year.

Despite the negative news, South Africa’s middle class continues to grow, and its specific needs are bolstering certain areas. Particularly, suburbs removed from city congestion, where local businesses thrive, there’s access to work, and quality schooling options are numerous. These areas offer better value-for-money and are attracting an increasing number of buyers.

One sector that seems immune to the fluctuations of the economy is coastal properties. Property values continue to rise in the face of the buyer’s market, outperforming their suburban and urban counterparts. Similarly, albeit not as aggressively, the demand for sectional titles is growing, perhaps pointing to buyers still motivated to invest but at a lower level.

Attempting to distil the effect of the recession on the entire property market is close to a practical impossibility. As shown above, where some sectors suffer, others flourish, and there’s no definitive answer to who stands to gain more from the current situation. However, buyers and sellers alike would be wise to be prudent during these times. There are opportunities on both sides of the market, and ultimately the winners will be those who can spot these and capitalise on them.


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