Realestateweb reporter 22 September 2008 Moneyweb
Some estate agency bosses say the firing of President Thabo Mbeki is less important than interest rates.
After a series of blows to consumer sentiment since the start of the year, the big question on many estate agents' and property owners' lips is whether the weekend axing of President Thabo Mbeki will be good or bad for the market.
The residential sector has taken a battering this year, with an estimated 20 000 estate agents leaving the market amid plummeting sales' volumes and as property prices have ticked downwards.
The recession in this industry has been linked in part to negative sentiment about South Africa, with sellers increasingly citing emigration as a reason to offload a home, and also to consumers finding it harder to obtain financing for various reasons.
Individuals have been particularly unhappy about high crime rates, power cuts and other issues where politicians are seen to have failed at their tasks.
Mbeki's resignation follows intense political pressure from within the ruling ANC. It means the country may be closer to seeing Jacob Zuma - a man acquitted of rape and whose friend Schabir Shaik is in jail in connection with a corruption case in which Zuma was named - run the country.
Zuma is popular with the voting majority, but there is concern about his integrity among the white minority and to a large extent sentiment in this group plays a role in the middle- to upper-income residential market.
Damon Jawitz, franchise director of Jawitz Properties, said weekend developments were positive because "we had a President who stood down very graciously". "We could have had a dictator. Instead, we had someone who listened to their party and people. This is has been a smooth process."
Jawitz said his agency expects "short-term turbulence". After that, the market should settle. People who are committed to the country need somewhere to live, he noted.
Dr Andrew Golding, chief executive officer of one of the country's largest estate agency groups, told Realestateweb.co.za he believes that the political uncertainty has been a factor in market challenges since the ANC gathering in Polokwane at the end of last year. That was when Zuma was chosen to lead the party.
"So, to that extent, I think it has been priced in. I don't think the resignation of Mbeki is going to have a particularly material effect, positive or negative," said the Pam Golding Property group boss.
He said interest rates would be an important catalyst to start a recovery in the housing market.
In the past six weeks, activity at show houses has increased but it is still "extremely difficult" to close deals and many buyers are struggling to obtain finance.
The National Credit Act, or NCA, has to a large extent saved South Africa from the credit crises being experienced elsewhere, he said. The NCA introduced stringent lending criteria, making it more difficult for consumers to obtain mortgage finance.
Samuel Seeff, chairman of Seeff Properties, said "sentiment is difficult to read at this point". He said "the beginning of a turn in the property market may be hampered by external factors such as the world market, specifically the US financial crisis, and current local political uncertainties".
"Renewed growth may be further away than originally anticipated," Seeff cautioned.
"While the shake-up of what is regarded as the biggest news break in South Africa since Mandela's release - the resignation of Thabo Mbeki has been seen by various analysts as well managed, with pragmatic solutions put forward."
"Both Trevor Manuel and Alec Erwin have expressed their commitment to staying on and it appears that most risks have been mitigated," said Seeff.
The situation in Zimbabwe is also looking rosier, another positive for the property market in general, he said.
Like Golding, Seeff highlighted the difficulties experienced by buyers requiring mortgages.
"There is undoubtedly a concern on how banks' liquidity is being affected by the NCA, to the point where they have introduced loan to value criteria. This is seeing them reject one in every two bond applications," said Seeff.
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