Despite Stats SA announcing that Consumer Price Inflation (CPI) decelerated from 7% year-on-year in February to 6.3% in March, food costs this March were nearly 10% higher than in March 2015.
“The property market is still alive, but there is a far greater chance of it getting worse than getting better. The elephants in the room - downgrade, Zuma's presidency and elections - will ultimately decide our fate,” says De Waal.This is according to David de Waal (CA(SA)), CEO of Steeple, who says the reduction in CPI for March is largely due to a 5% petrol price cut, and, although welcome, is unfortunately probably not the start of a series of monthly reductions.
“The Reserve Bank will still be under pressure to raise interest rates this year - especially if a downgrade happens - so we don't expect the property market to start improving soon,” he says.
De Waal says Consumers are under financial pressure, and may elect to rent instead of buy or opt to purchase a cheaper property.
“We’ve also seen many sellers switch to our low commission estate agency service so they can afford to reduce their selling price - and make a sale more likely - without impacting their back pocket,” he says.
“The property market is still alive, but there is a far greater chance of it getting worse than getting better. The elephants in the room - downgrade, Zuma's presidency and elections - will ultimately decide our fate.”
However, De Waal says it is not all doom and gloom, and there are still opportunities within the local market if you do your research.
“Property investment is a long-term commitment, and short-term factors should not deter sellers and buyers from making intelligent investment choices,” he says.
