What Brexit Means for SA Property
Category News
Berry Everitt, CEO of the Chas Everitt International property group, says: “Brexit will probably not have much effect on the trade agreements between SA and Europe, which is still our main trading partner. However, there is obviously uncertainty around any direct agreements with the UK, and these may well have to be re-negotiated now."
“More seriously, there are many SA companies listed on the London Stock Exchange and they will feel the pain of change, starting with the drop in the value of the pound. In due course it is also going to become much more expensive for them to access any European markets, and probably other markets as well, and this could affect their profitability and ability to sustain their current operations in SA. That may have implications for local employees."
“Meanwhile, the unexpected outcome of the Brexit referendum has already softened global markets as uncertainty always does, and the rand has taken a knock along with the currencies of other developing countries, which is also usual in such circumstances. On the plus side, however, there has been something of a flight to gold and other ‘safe-haven’ investments, which always benefits our economy.”
As for the potential effects on the local property market, he says that volatility in global markets usually discourages investment in any emerging country, but that this is likely to be short-lived, and to have more of an effect in the commercial and industrial sectors than in the residential sector.
“Foreign buyers still don’t account for a very large slice of our residential property market, but the exchange rate is such that those buying in Pounds and Euros will still be able to secure great deals. Meanwhile, SA is attracting increasing interest from wealthy buyers in the Far East, Africa and the US who are also developing business interests here, and this is likely to balance things out."
“In addition, as the threat of the EU breaking up mounts, we foresee that many ultra-wealthy South Africans who were buying ‘golden visa’ properties in various parts of Europe will now stop doing so and may well choose to keep that money in SA, at least for the time being.”
Everitt does not expect Brexit to result in any decline in SA property prices overall, and says there is thus no point in prospective buyers and investors delaying their plans. “SA has a persistent shortage of supply in relation to the demand for housing which underpins both home prices and rental increases, and buyers who hesitate inevitably just end up paying more and / or earning less.”
Issued by Chas Everitt International
For more information contact
Tel: 011 801-2500
Or visit www.chaseveritt.co.za
Author: Barry Davies