Property market faces multitude of issues

18th November 2020

By: Donna Slater

Features Deputy Editor and Chief Photographer


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South Africa’s poor economic state, which is described as “bleak”, is set to persist, and will continue to have a negative and disrupting impact on the property and housing market, property consultants, valuers and town planners Rode & Associates CEO Erwin Rode has said.

Speaking during a virtual property conference on November 17 on the theme of Prospects for the South African Residential Market, he noted that economic growth was unlikely to recover significantly over the next five years.

He stated that the property and housing market was "completely and utterly" dependant on the state of South Africa’s economy which is in a dire state.

“South Africa has been living beyond its means for about ten years.”

In terms of the prevailing long cognitive cycle in the domestic property market, Rode says this is about 15 to 20 years. “In fact for offices and industrial, the current one will be as long as 25 years because of the very special circumstances we find ourselves in.”

As such, he says the historically long cognitive cycle will become even longer because the demand side of the industry is driven by “irrational investor exuberance” near the peaks of the cycle, which creates “asset bubbles”, as were experienced globally in 2007 and 2008.

In turn, Rode explains that the worse the exuberance is during peaks of the cycle, the longer the recovery will take.

However, at the same time, globally, he highlights that there is also a culture that one cannot go wrong with bricks and mortar, which leads to property buyers completely ignoring the cycles and buying as and when they please.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online



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The Southern African Institute of Mining and Metallurgy
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