Property stakeholders expressed concern in a discussion about what post-election scenarios — including an ANC-EFF coalition government — could do to the market.
Developers, fund managers and political commentators shared ideas during a webinar last Wednesday about the implications for the property sector after the country votes.
Rob Wesselo, CEO of International Housing Solutions, said many investors were anxious about the possibility of a coalition government.
“It might be perception but the people that I talk to — we attract a lot of foreign direct investment — are terrified the EFF will have anything to do with power in this country.
“It might be short-term but I think if there is an ANC-EFF coalition it will weaken the rand and that will be inflationary and, because of the rand, it will have a longer-term effect on interest rates. That is not good for the property market,” Wesselo said.
Polls have indicated that the ANC may drop below 50% of the vote and need a coalition to stay in power.
But political commentator Onkgopotse JJ Tabane said despite the poll prediction, the ANC could shock everyone by taking more than half the votes because of its huge support in rural areas.
“The ANC may surprise us with 53% despite what the polls say. If that happens, I suppose there is little to worry about because the ANC has not changed anything in its manifesto. I supposed the market likes stability,” Tabane said.
What South Africa did not need was a government made up of many political parties, as the experience of coalitions at local government level had demonstrated.
He said the EFF had around 11% of the electorate, which gave it little power to enforce its policies in a coalition government.
“The view that if the EFF is part of the coalition the rand will drop to R20 against the US dollar is an exaggeration. If they get into a coalition they cannot insist on their policies that are seen by the other parties as extreme.
“If you want stability, the EFF-ANC coalition may be the best thing because their policies are not far apart. The ANC has talked about a state bank, expropriation of land — they just differ on mechanism. If you put the DA and ANC together [there] might be squabbles,” Tabane said during the webinar, which was hosted by the property sales group Rainmaker.
The EFF has been open about its position on property rights, advocating expropriation of land without compensation and insisting that the state take over strategic sectors of the economy such as mining.
Another panellist, Carlos Correia, CEO of the Fundamentum Property Group, said whatever the outcome, the ruling party would have to change the direction of the country as the current economic environment was not sustainable.
“I think if we carry on the way we are being run [as a country] at the moment we will face more and more challenges in our economic growth, unemployment will carry on and the youth will get disillusioned.
“I hope that the electorate is sensible about these elections because I think it will be a challenge to have the ANC in a position where they take the next five years without having some coalition partner,” he said.
Steve Brookes, CEO of Balwin Properties, said developers were calling for partnerships with government linked to electricity, water, sanitation and RDP housing.
“We’ve tried desperately with high-level government. The will is there but the reality of making it happen is very poor. It is really tough out there. The government treats us like absolute dirt. We have to beg. I’m busy looking at development in Mauritius. The development unit of that government came to our offices and welcomed us with open arms,” Brookes said.
Wesselo shared the same sentiment on the government not taking property developers seriously.
“We’ve built 30,000 affordable houses in the past 12 years in South Africa. But we cannot get an appointment with anyone in government. We’ve done this with money that has been raised from offshore foreign direct investment to build affordable housing. We own and manage 12,000 affordable rental units but we can’t get an appointment with government,” Wesselo said.
Correia said the private sector could step in to improve the management of public infrastructure where local government was struggling.
“We are saying invest in infrastructure and allow the private sector to manage that infrastructure. We can't rely on government to do maintenance of infrastructure because the backlog is too big at the moment,” he said.
On the issue of whether the elections would influence property sales, experts were unanimous that buyers should not be anxious.
“Properties put a roof over your head. I don't think if you need to buy a property doing it now or in a month’s time will make any difference. I don't think there is going to be a huge change so I don't see a need to wait. Where I see a reason to wait is let us see some interest rates cuts,” Brookes said.
Real estate broker Christine Marsh said: “Despite any short-term fluctuations due to elections, historical data suggests that the anticipation of interest rate cuts in the second half of 2024 is expected to stimulate sales activity in the Cape Town region. Lower interest rates not only enhance affordability but also instil confidence among buyers, potentially driving up demand.”
Josh van Tubbergh, general manager at Jambo Homeloans, said: “Traditionally, sellers often wait for the dust to settle after elections before listing their properties, anticipating a more stable market. However, while some sellers are holding off, there remains consistent demand from buyers.
“People need homes regardless of political circumstances, and investors are always seeking opportunities to diversify their portfolios. By listing your property now, you're entering a market with fewer homes to compete with while buyer interest remains robust,” Van Tubbergh.
