I started my last article wondering whether, by the time it was published, another South African golfer would have earned a Green Jacket at the conclusion of the Masters Tournament at Augusta National Golf Course.
As it turns out, we saw the most incredible victory for Tiger Woods winning his 15th professional major golf championship, making him second only to Jack Nicklaus, who leads this specific record with all-time victories of 18. Congratulations, however, must go to Justin Harding, who finished joint 12th in his first Masters, and will be playing in the event again next year. He knows where to find a bag man for the Par-3 contest, should his dad not be able to attend in 2020.
Golf is a sport where the outcome is uncertain (typically), until the last few holes on the final day of a tournament. That is what makes it so exciting. In the housing market uncertainty, however, is very negative as all investors require a level of certainty in order to make decisions.
It is far easier to invest (or buy a home) with a level of knowledge, which suggests that your capital investment will escalate by anything between 2% and 8% per annum, as opposed to buying a home in a market where you do not have any idea as to whether the next piece of political rhetoric will cause a level of civil unrest or disobedience that will affect the expected growth in your town, province or country for the next year or two.
I mention a broad range of escalation above, to illustrate that it does not matter to an investor what the real escalation is, only that there is certainty of some level of expected escalation.
Let’s go offshore for the moment and look at what is happening in the UK. The European Union and the United Kingdom have agreed to a postponement for Brexit until 31 October 2019. This means that the UK must now take part in elections for the European Parliament on 23 May. This event was certainly not contemplated when the UK was originally meant to have left the EU by 29 March.
Imagine having to predict future economic conditions in an environment like the UK now, when there is no real certainty as to whether your country will be part of a broader union, or have to face the world on its own at some time in the future.
From a housing perspective, the growth or decline in the market in the UK is always linked to economic growth, and not directly to the Brexit decision or outcome, but the economic growth forecasts for the UK are so uncertain at the moment that they obviously affect everything related thereto.
What struck me as I drove into work this morning was that our problems at times pale into relative insignificance when compared to those in some other parts of the world. We live in a truly beautiful part of the world, in an environment where 99.9% of us (not an accurate, but rather a figurative percentage) really want the same thing – safety for our families, a decent daily meal, a roof over our heads, adequate medical care and effective education.
Perhaps I have missed some of the basics, but the point is that South Africa breeds a fantastic bunch of people who have shown the world that a rainbow nation is able to thrive when everyone works together. We always seem to have issues before elections which are normalised afterwards as we have assurance about the future – irrespective of the outcome of the elections.
To be very clear, this is not a political statement relating to what is taking place in our country over the next two weeks, it is a statement that the property market will, thankfully, return to a level of normality following the elections on 8 May. We will have an enhanced level of certainty as to what the future holds. Unlike the UK which is still going to be involved in a high level of uncertainty for months to come, South Africa will have a base to continue building on after 8 May.
Stability will reassure both buyers and sellers over the next few months, which will lead to a reduction in the current gap between buyer and seller expectations of price. Whether this gap reduces from the bottom up (sellers’ market) or from the top down (buyers’ market) will be determined by the future-growth expectation and also, specifically in Hermanus and surrounds, by the level of return of the foreign buyers.
In closing; this week I asked a potential client to point out his boundary with his neighbour, in a situation where there was no fence or wall between the properties. His answer was superb – “Come back on Wednesday, because that is when he cuts his lawn – it will be very clear then”.
The views expressed above are those of the writer in his personal capacity and may not necessarily reflect the views of Fine & Country as a national and international brand.