24 May 24

Beyond the vote: Anticipating the property market post-elections

Leading up to the South African General Elections on 29 May 2024, it’s an open question as to how the national property market would react to the elections.

On 22 May, we hosted a pre-election conversation via webinar with several of the country’s top developers as well as a leading political commentator and specialist.

Facilitated by Stefan Botha, Director of Rainmaker Marketing, the panel consisting of Professor Ongkgopotse JJ Tabane, political commentator and host of The Power to Truth on ENCA, Steve Brookes, CEO of Balwin Properties, Carlos Correia, CEO of Fundamentum Property Group and Rob Wesselo, CEO of International Housing Solutions, discussed everything from election outcomes to affordable housing and the developer landscape, both pre- and post-elections

While we can only anticipate what could happen, what we do know for sure is what impact a strong property market has on the economy of this country in terms of infrastructure, job creation, rates income, housing delivery and the general ability for all South Africans to build wealth.

Political landscape and coalition scenarios

The discussion kicked off with Professor Tabane, providing a comprehensive analysis on the various scenarios. He highlighted that while polls indicate a possible decline for the ANC, the outcome remains uncertain due to the significant reliance on social grants by rural populations.

Professor Tabane emphasised that even with polls suggesting a drop to 43%, the ANC might still secure around 53%, maintaining a semblance of status quo which markets generally favour.

It was further outlined that the most likely scenarios would either be that the ANC secures just over 50% with minor coalition partners or falls below 50%, necessitating a coalition with either the right being DA or the left, being EFF. He underscored that despite fears, a coalition with the EFF might not be as detrimental as some predict, given the similarity in policies between the ANC and EFF.

“We may want stability of the Rand, but that is a short-term gain, because the Rand by its nature is inconsistent,” shares Professor Tabane. He continues to explain, “You can’t do the same thing. You need something different and unfortunately it may be in an extreme view that is within a DA or EFF. All we need to do is to make sure you can have a happy medium. That’s what coalitions are about! It’s not to arrive and insist on your policies.”

Impact on the Property Market

When asked “What advice do you have for buyers, within any sectors of the property industry, when it comes to timing of their property purchases, especially those we are waiting until after elections to make decisions?”

Steve Brookes, discussed the resilience and potential of the South African property market. He stressed the need for fundamental improvements in education and infrastructure, highlighting the Western Cape’s successful infrastructure development as a model.

Brookes remains optimistic about the market, noting that South Africans are resilient and have a deep love for their country, which bodes well for ongoing investments in property.

Carlos Correia, echoed this sentiment, emphasising the maturity required at the national level to foster stability and growth. He pointed out that despite political sensitivities, resilience among South Africans ensures continued investment and optimism about the country’s future.

Regional Impacts

Professor Tabane provided an overview of his expected outcomes in key provinces namely Gauteng, KwaZulu-Natal and the Western Cape. He predicted that the DA would narrowly maintain control in the Western Cape, while KZN would see a coalition government, likely involving the IFP and MK party. In Gauteng, the ANC might secure a slim victory, possibly requiring coalition support, which could foster a more balanced and accountable governance structure.

Corruption and accountability

A thought on everyone’s minds, and a thread that came out throughout the discussion was the question of corruption and accountability. Professor Tabane addressed the pervasive issue of corruption and its impact on the country’s resources. He stressed the importance of consequence management and transparency. According to the Auditor-General’s report, approximately R60bn has been wasted annually over the past decade, with no accountability for those involved.

The panel highlighted that while the public is aware of some instances of corruption, the full extent remains unknown. A coalition government, he suggested, could potentially mitigate this issue by fostering mutual oversight among coalition partners, thus ensuring greater accountability and reducing corruption and putting it back into the country’s resources initiating growth and change.

Housing crisis and public-private partnerships

Addressing the housing crisis, Steve Brookes highlighted the importance of partnerships between the private sector and government. He stressed the need for government investment in infrastructure to support large-scale housing developments. Brookes pointed out the challenges developers face due to the lack of governmental support, advocating for a more collaborative approach to address the housing backlog.

Rob Wesselo discussed the complexities of social housing projects and the need for more responsive and supportive government interactions. He emphasised that successful housing initiatives often result from strong public-private partnerships, which are currently more prevalent in the Western Cape. “Every time Steve builds 5000 units, you have 5000 rates and taxes bills that never used to go out before,” explains Wesselo on how developers help strengthen local municipalities.

Carlos Correia elaborated on the benefits of privately managed precincts, which have proven successful in maintaining infrastructure and ensuring efficient service delivery. He advocated for expanded public-private partnerships to address the critical infrastructure needs across various regions.

Advice for property buyers

Brookes offered practical advice for property buyers, stating the importance of acting based on current needs rather than waiting for post-election outcomes. He noted that property remains a fundamental investment and encouraged buyers to consider long-term benefits, including potential interest rate cuts. He also highlighted the importance of securing decent housing and leveraging property investments for capital growth.

Conclusion

Stef Botha concluded that none of us are passive participants and encourage everyone to go out and vote on the 29^th.

“We can focus on the facts and we can look through all this murky space that we are in, but we can all be active agents and not passive observers,” Botha said “It’s the active agents that can really drive change in our country and we have a very positive future ahead of us, following the example of the panellists present who have made considerable positive contributions to our country.”