Leaked Emails ironically good for homes market sentiment

As they continue to bubble to the surface, the steadily leaking “GuptaEmails” are providing a strange sense of national relief. They are adding credence to the long-held perception that South Africa Inc is being systematically sucked into a maelstrom of corruption – with incremental ‘state capture’ at its core. 

The homes sector is, and always has been, allergic to uncertainty. Therefore, the current systematic exposure by the media of the Emails is, ironically, potentially good for market sentiment. True, the disclosure of the documents may well be bitter pills for the nation to swallow. And there is no question that they will take time to roll out – given that the key contents of reportedly tens of thousands of the emails will potentially be brought to light. At least, what was previously intangible is now becoming more recognizable.

SA now in technical recession

Meanwhile, the latest figures released by Statistics SA show that the South African economy has now slipped into a ‘technical recession”. This is the first time we have been there since the 2009 global financial crisis. The residential property market weathered that major setback almost a decade ago. And I have no doubt that it will do so again in the current downcycle, which is driven by negative sentiment on political, social and economic issues. At the core of these issues is the ‘State capture’ phenomenon, the details and extent of which are at last becoming apparent as the ‘GuptaEmails’ disclosures continue to roll out. In the process, it raises questions about the credibility of Government and its use of State resources. It also casts a shadow over the integrity of ruling party members and executives of State-owned enterprises. 

The forces behind this phenomenon don’t have the nation’s financial and commercial interests at heart. Therefore, they won’t welcome the groundswell of calls for the establishment of a judicial inquiry to unmask it.

Buying at a discount

If I was a buyer in the current market, I would be careful, but not overly hesitant.  Buying a home is a lifestyle thing – and if you see something that really fits your lifestyle and your family needs, act now. You will be buying at a discount anyway. By holding on for a further price dip you may miss out on the ideal home. The market is likely to start improving in the months ahead. What is effectively happening right now is a typical property market correction in a downturn economy. 

Unfortunately, it is being given added traction by governance and corruption issues. 

The result has been a fall in market activity; a flattening of house price growth; a widening of the gap between buying and asking prices; longer selling time frames; ill-founded ‘panic’ selling; and, unfortunately, a higher level of ‘distress’ selling by over-committed owners. The worst of these sentiments impacting the market are behind us now. The rand has been stable recently, 30% rise in agricultural output, a decrease in consumer inflation, and steady interest rates bode well for a much improved latter half of the year.