South Africa’s winning bid to host the 2010 soccer world cup will give an instrumental boost to the economy. It is expected to bring nearly R30 billion into the country, create 150 000 jobs, and become a major catalyst for the economy to grow at between 5 & 6%, as well as resolve many of the country’s problems. There is no need to mention what impact this will have on property, especially tourist-focused property.
This coupled with the fact that the country is currently in a very strong and stable position, is the reason why there is such a positive spirit and atmosphere amongst the people. There is a large trend from both South African’s based overseas and international buyers, towards purchasing property in South Africa and this shows the confidence which can be found in the market. Last year alone, the country’s residential properties as a whole rose by 23%, one of the best markets in the world. This is however not a bubble / bust scenario, as South Africa is unique and readjusting from legacies of its past. Firstly due to the governments Affirmative Actions policies, there is a strong black middle class developing in the country. They are now in the property market, are affluent and having a tremendous impact on the economy as a whole.
Secondly by September last year all South African’s who had illegally taken money offshore during the Apartheid era were allowed to bring it back under an amnesty period. Obviously this has needed to be invested and thus the property sector has enjoyed the effect of this capital influx. Thirdly due to insecurity and a lack of confidence in South Africa, through the Apartheid era and then into the new democracy, property has not increased at the same rate as the global market. Therefore, with the new found stability and confidence the prices are readjusting to come in-line with the countries GDP growth and that of the global market. Fourthly, another global trend, without going into detail, is where the money markets have not been performing, people are looking to take more control of their lives and their pensions and so they have seen residential property as a vehicle which could provide them with the returns they are seeking. Taking this all into account, it is a very interesting statistic that South African property, based on inflation, etc is the same price as it was 1982.
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