After a gruelling 15 months in which both lives and livelihoods were lost, we’re finally starting to see light at the end of the tunnel. Over 1.7million South Africans have now been vaccinated against Covid 19, with further vaccine rollout progressing at pace. There are also encouraging signs of hope and recovery on the horizon – politically, economically, and within the residential property sector:
On a political front, the campaign against corruption and state-looting has finally starting to yield results, with high profile figures like Jacob Zuma, Ace Magashule, Supra Mahumapelo are being brought to book, and warrants of arrest issued for the Gupta brothers, Atul and Rajesh.
On the economic front, it appears that our economy is growing faster than anticipated, while the initiatives launched last week suggest that momentum is building to support further growth. One need only look at our currency to see that things are looking up: The Rand is currently trading at R13.70 to the US dollar after hitting an all-time high of R19.35 in April last year. The last time the Rand traded under R14 to the dollar was in 2019. The SA Rand is also the only major emerging market currency that has strengthened against the dollar this year.
The South African Reserve Bank also recently stated that SA’s terms of trade remained in positive territory, having improved for a record seventh straight quarter in Q1 of 2021. This means more capital is entering South Africa than leaving our shores. SARB has consequently elected to maintain its benchmark repo rate at a record low of 3.5%.
According to Stats SA, in the first three months of 2021 our economy grew on an annualised quarter-on-quarter basis by 4.6%, exceeding expectations of 3.2% growth. This means that South Africa is wealthier than previously expected, and regaining ground lost to the pandemic faster than expected.
There’s also good news on the structural reform front: Last week’s announcement of an increased 100MW cap for embedded electricity generation will go a long way to addressing the energy crisis and mitigating the crippling effects of load-shedding on our economy.
There are many other legislative amendments and structural reform initiatives – linked to renewable energy and power generation, road and transportation infrastructure, fibre services and telecommunications – in the pipeline, which will go a long way towards creating jobs, improving living standards, and boosting SA’s productivity.
And finally, our Government’s decision to sell a 51% stake in SAA to the privately owned Takatso Consortium demonstrates a real commitment towards ensuring that under-performing state-owned entities become financially viable, and no longer a drain on the taxman.
There’s good news for property investors too. Property investment is integrally linked to consumer confidence, so one might have expected a steep decline in the sector following the outbreak of Covid 19 last year. Strangely enough, the anticipated downturn failed to transpire, proving yet again how resilient the residential real estate market is.
Some of the country’s top real estate brands recorded record sales during 2020. Pam Golding, for example, noted that despite two months of (virtually) no trading, they still managed to exceed their 2018/19 numbers both in terms of units sold, and sales value achieved. 2020 also registered the highest volume of mortgage approvals in South Africa in more than a decade, with bondable registrations in the deeds office between June and December 2020 increasing by 18.40% year on year.
FNB’s Consumer Confidence Index reported that consumer confidence in Q1 2021 had returned to pre-lockdown levels. This is helped by a sharp decline in COVID-19 cases along with the South African Reserve Bank’s decision last week to keep the repo rate unchanged at 3.5%
The Covid-19 journey has been a long and gruelling one, and we’re by no means out of the wood yet. That said, there are certainly some encouraging signs of recovery and economic growth within the sector. Savvy investors would be well advised to get in early and capitalise on the purchase incentives currently being offered by developers. At One on Whiteley in Melrose Arch, for example, there are two incentive packages – a “buy-to-live” package that offers a refund on rates and levies for a year; and a “buy-to-let” package that carries a 12month rental guarantee. To find out more, please visit www.oneonwhiteley.co.za