By SIYA MITI
POLITICAL uncertainty, the Eskom crisis and crime are hot on the heels of interest hikes as key factors driving the residential property market’s current nosedive.
This is according to FNB’s Property Barometer for the first quarter, released yesterday.
The survey notes that these are the concerns behind emigrations and “semi-grations” (relocating within the borders of South Africa), which are currently affecting the residential property market in South Africa.
According to the survey, conducted among estate agents, these three factors, together with the threat of neighbouring Zimbabwe’s brewing political turmoil, came out ahead of the National Credit Act (NCA) as major causes for the slump in the residential property market.
However, according to property economist John Loos, property agents interviewed in the survey pointed to surging interest rates as the leading cause for the slump .
“We believe that rising interest rates are probably still ‘public enemy number one’ in terms of exerting pressure on the residential property market,” said Loos.
“However, the gap is narrowing between the importance of interest rates and non-interest rate negative forces.”
Loos added that the National Credit Act, which in the last quarter of 2007 was in the number two spot behind interest rates, had slipped back into number three position behind the category labelled “general economic downturn and negative sentiment”.
Crime, according to the barometer, was a significant contributor to “negative sentiment” that led to emigration and semi-gration.
Prominent reasons given in the survey for selling property were relocating for security reasons and emigration .
The Southern Cape coast proved the most favoured spot for semi-gration relocations.
This is attributed to lifestyle factors there such as relatively low crime levels, while Gauteng, at 14 percent, had a higher rate of relocations for security reasons than anywhere else in the country.
“The Southern Cape is believed to have had rapid economic growth off a smaller base,” said Loos.
“The combination of its lifestyle, as well as the repelling force of crime in the major metros, may boost the region’s ability to attract the skills set necessary to sustain high rates of economic growth, thereby boosting residential property demand,” he added.
According to him, political uncertainty emanating from the ANC’s Polokwane conference and the situation in Zimbabwe are prominent among the non-interest rate factors that are dragging the residential property market down.
“Amongst these would feature the perceived heightened political and policy uncertainty following Polokwane , which leaves the ruling party seemingly at odds with its own government, while the Eskom debacle early in the year must have contributed.
“The negative effects of a global economic slowdown on the local economy must also have played a role,” he said.
“And the heightening Zimbabwe crisis and government’s poor handling of it has been noticed by many,” Loos added.