Latest news with #SchoolofEconomicSciences
IOL News
05-06-2025
- Business
- IOL News
The challenges facing South Africa's property market amid global uncertainty
Last week's repo rate cut will help boost the South African property sector a little bit. Image: Picture: Ayanda Ndamane/African News Agency (ANA) The property sector struggles when there is much international and local uncertainty such as that seen in the first quarter of this year. The first quarter gross domestic product (GDP) number is bad at only 0.1% growth, said Professor Waldo Krugell, an economist within the School of Economic Sciences at North West University (NWU). He said the property sector is captured under gross fixed capital formation which saw contractions in residential buildings (-5.8% and contributing -0.6 of a percentage point) as well as construction works (-2.8% and contributing -0.5 of a percentage point). Going forward, Krugell said last week's repo rate cut will help a little bit. However, he said that what is needed is more government of national unity (GNU) reform momentum and some tangible results from implementation. South African bond yields dropped sharply by the end of trade on Wednesday after Parliament passed the National Budget, boosting market confidence in Treasury's ability to tighten control over fiscal management, while the SARB's support for a lower inflation target promotes inflation control and stability, said Bianca Botes, the Director at Citadel Global. She said that markets remain cautious ahead of key US data due to be released on Friday, which could offer fresh direction. 'Recent figures show a slight slowdown in US economic activity, suggesting that tariffs and ongoing uncertainty are weighing on US growth. 'Nonetheless, global equities hit a record high on Wednesday, as investors bet that the volatility sparked by President Trump's 'Liberation Day' declaration might be behind them,' Botes said. Krugell noted with interest, reports of the commercial property sector doing much better in the Western Cape than elsewhere in the country, simply because the economy there is doing much better. 'The need for reform and better service delivery has a distinct spatial character. It underscores the importance of the work of Operation Vulindlela 2.0,' he said. Correlating strongly with City of Cape Town reports of a record-breaking summer tourism season, international property buyers have invested in record numbers in the city's hotspots, according to the Seeff Property Group. Propstats data shows that sales worth almost R2.5 billion were concluded in the first five months of this year, the highest in the last half-a-decade. The total value for the whole of 2024 amounted to R3.4 billion, and it was similar in the prior year, 2023. Sales to international buyers were said to have reached a record R600 million in February, and R700 million in April across the whole city. More than two thirds (67%) of the total value were generated by sales across the Atlantic Seaboard and City Bowl. Ross Levin, licensee for Seeff Atlantic Seaboard, said sales activity has been up quite notably this year. For the Atlantic Seaboard alone, he said sales to international buyers amount to about R530 million for April. Overall, there were sales in just about all of the suburbs. The highest values recorded are in Camps Bay and Bantry Bay, and the highest volumes in Sea Point (27) and the CBD (32). Buyers from more than 40 countries invested in property across the Cape this year. The highest volume was attributable to buyers from Germany, followed by the UK, Netherlands, Switzerland, and other European countries. There has also been a notable uptick in sales to American buyers who bought predominantly in Sea Point, Bantry Bay, Mouille Point and in the City Bowl. Buyers from other African countries have also made a welcome return, including some 12 countries, being Angola, Cameroon, Congo, Eswatini, Gabon, Ghana, Mauritius, Mozambique, Namibia, Nigeria, Tanzania, and Zambia, with Nigeria being the stand-out in terms of the volume of sales. Levin said the whole market across the Atlantic Seaboard and City Bowl has been very active and there was a shortage of stock, thus presenting good opportunities for sellers right now. Notable recent Seeff sales to foreign buyers include two sales to German buyers at R21 million in Camps Bay and R29 million at the Waterfront as well as a R29.5 million sale at the Waterfront to a buyer from Eswatini. Other areas where international buyers have been active include Constantia and Bishopscourt in the Southern Suburbs, False Bay areas such as Muizenberg and Fish Hoek, Southern Peninsula suburbs such as Kommetjie and Scarborough, Hout Bay, and Blouberg, where Marlene Picksley, an agent with Seeff Blouberg concluded a record sale of R16.5 million at Sunset Beach to a buyer from the US. Hout Bay has seen particularly strong demand from international buyers, with as much as 37 sales to buyers from a number of different countries, especially Germany, Netherlands, UK, Denmark, and other European buyers, and the US. According to Stephan Cross, manager for Seeff Hout Bay and Llandudno, the buyers spent between R5 million to R25 million. He said the Hout Bay market has been particularly hot this year with high sales activity and a shortage of stock, thus presenting good opportunities for sellers.
IOL News
20-05-2025
- Business
- IOL News
How Budget 3. 0's focus on infrastructure investment could transform South Africa's property market
Pressure is mounting on Finance Minister Enoch Godongwana as he is expected to table the National Budget Review for the third attempt in Parliament on Wednesday after tensions within the Government of National Unity coalition over an increase in value-added tax (VAT) rates led to the budget being amended and re-tabled three times. Image: File As the Finance Minister Enoch Godongwana re-tables the revised National Budget on Wednesday, the major expectation will be around the fiscal aggregates, specifically the budget deficit and debt-to-GDP ratio. Professor Waldo Krugell, an economist from the School of Economic Sciences at the North-West University, said whatever spending cuts the Minister comes up with will still need to protect frontline services and maintain the path of fiscal consolidation. 'The influence on the property sector is quite indirect, but if he is able to do that, it can increase business confidence and investment in general, and that is good for property. A more sustainable fiscal stance will also help to bring down interest rates on long-term government debt, which is good for other interest rates in the long run,' Krugell said. Dr Meshel Muzuva, the Academic Programme Leader at the Management College of Southern Africa's (MANCOSA) School of Business Excellence, said as South Africa prepares for the re-tabling of what is now known as Budget 3.0, expectations are high, and the stakes are even higher. She said this iteration of the national budget arrives amid a shifting political landscape, a weakened growth outlook, and growing fiscal pressures. 'It is more than just a reset; it is an opportunity to reinforce fiscal credibility while laying the groundwork for inclusive economic recovery,' Muzuva said. She added that with GDP projections revised downward and inflation easing, the Finance Minister faces the tough task of balancing lower tax revenues against growing spending demands, all while maintaining the commitment to fiscal consolidation. 'Despite some relief in the form of improved corporate tax collections and a R15 billion closing cash surplus, fiscal space remains tight. The main budget deficit has improved slightly to 4.5% of GDP (Investec, 2025), but with debt levels still elevated, tough trade-offs are inevitable.' For the property sector, the academic said the budget is a significant development. She said they would be looking out for infrastructure investment in increased allocations to transport, energy, and housing as this could unlock new development opportunities and boost land values. She said they will also be looking for tax policy as changes to transfer duties, capital gains tax, or bracket creep could impact property transactions and investor confidence. 'Any upward shift in transaction costs would likely dampen demand, especially in the mid-tier and high-end residential markets.' Muzuva said that while the South African Reserve Bank (SARB) sets rates, fiscal policy can influence borrowing costs. She said a stable budget could help ease long-term interest rate pressures, benefiting mortgage affordability and real estate financing. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ The academic added that they would also be looking for housing incentives as government support for affordable housing or urban densification initiatives would be welcomed by the sector. However, she warned that, given current fiscal limitations, expectations around substantial incentives should remain measured. Tsekiso Machike, the spokesperson for the Minister of Human Settlements, said that the shrinking government's fiscus with the department budget cuts and like any other government department and institution. 'We would appreciate it if we could be allocated more money to enable the department to accelerate its housing delivery programme to the deserving and qualifying beneficiaries and eradicate the housing backlog. "However, we are looking forward to the upcoming Budget and are optimistic that there will be a reasonable allocation of funds to the department under the circumstances of budget cuts and constraints,' Machike said. Adrian Goslett, CEO of RE/MAX of Southern Africa and chairman of the Real Estate Business Owners of South Africa (REBOSA) notes that this about-face was born of coalition politics, but said it ultimately reflects a commitment to stable, consensus-driven economic management, a factor he views as crucial for investor confidence in the country. 'When the Budget 3.0 is announced, I'll be focusing on the scrapped VAT increase and how the government plans to compensate for the revenue gap – hopefully, there will be no reversal of the increased exemption threshold for transfer duty from R1.1 million to R1.21 million,' Goslett said. He said one of the less visible but critical outcomes of the budget saga is its impact on the interest rate outlook. ' By avoiding a VAT-induced price spike, Budget 3.0 removes one potential upward driver of inflation, which could help the case for interest rates to remain steady (or even ease) later in the year,' Goslett said. Muzuva said Budget 3.0 is a pivotal opportunity to restore confidence. She added that for the property sector, the focus will be on whether the government can prioritise growth-enabling investments, protect infrastructure commitments, and send a clear signal that South Africa remains open for investment even in a constrained fiscal climate. Reezwan Sumad, a research analyst at Nedbank CIB, said on Tuesday morning, the local markets are likely to remain cautious ahead of both the budget and the meeting between the South African and American delegations on Wednesday. 'Until the outcomes of these are known, participants are likely to remain on the sidelines,' Sumad said. Independent Media Property
