Will the election result be your suspensive condition?
Category Property Advice
Voting day is on the 8th May and professional opinion is that now is the time to buy.
Why is now the time to buy? The market has been subdued for circa 18 months and labelled a buyer's market but like all markets, they rise and fall. The market has been mainly affected by drought and politics.
In general, 2018 was a poor year for property sales in Cape Town, with the city experiencing the worst drought on record and a general attitude amongst investors of waiting to see how the country fares under Cyril Ramaphosa's leadership.
South African economic growth was at 0.8% and 0.9% for 2017 and 2018 respectively. South Africa was in a technical recession in the first half of 2018, with negative GDP growth recorded and the economy contracting by 2.6% in the first quarter of 2018 followed by 0.4% in the second quarter. Fortunately, the third quarter of the year saw a turnaround with positive GDP growth of 2.2%, bringing to an end the country's second recession since 1994. Analysts expect growth of 1.6% in 2019, and 1.9% in 2020.
Moody's affirmed the country's rating at one notch above sub-investment grade in March 2018, with the outlook set at stable. At the time, Moody's said its affirmation was on the basis that South Africa's institutions would improve under a more stable policy framework, and that there would be fiscal consolidation amid rising social cohesion following the change in the country's political leadership.
Where else has a political outcome affected the conditions of a buyers offer? Pre Brexit referendum, estate agents in London were taking multiple offers on properties with conditions based on the referendum outcome. Many owners and estate agents lost their deals based on the result to leave. The London market has been in limbo ever since. However, the opportunists are now saying that it is time to buy in London as it is perceived the market is at its all time low.
An opinion of what is the right outcome in this coming election is subjective. If we look at the market from a micro perspective and concentrate on Cape Town, I would advise that now is the time to buy. There will be a period whilst demand catches up with supply but a market can turn very quickly. Cape Town attracts buyers not only locally but also from other South African cities like Johannesburg. Much of the international interest will only come later in the year closer to the summer months so now is the time for South Africans to buy property during the winter months.
Picture courtesy of https://buzzsouthafrica.com/
Author: Knight Frank
