How the recession impacts the property market

Spring may be in the air, but many South Africans are feeling far from fresh – and if you have been looking at property for sale in Krugersdorp, this will certainly not come as a surprise.

The property market is just one area in the country that is currently feeling the impact of economic and political pressures that have plagued 2018 so far. The weaker rand is making it more difficult for buyers to get into the market, especially younger buyers who are looking to make their very first purchase.

Another factor that causes caution in the property market is that there is a risk of negative home equity. This is not something that happens often in South Africa, but because of current circumstances the risk of your market value dropping below the mortgage is a possibility and could leave buyers in a bad spot.

The reason September proved to be a significant month is due to the fact that Statistics South Africa made the announcement that the country had moved into a technical recession. This may be a little confusing for the average Joe, but essentially it means that South Africa suffered two quarters of negative growth in the economy.

This goes against what the Treasury had forecast, which was 1.5% economic growth during this year. The first quarter saw the economy retract by 2.6% and when it was revealed that there was a further contraction of 0.7% in the second quarter, it meant that the country dropped into a technical recession – with the economy shrinking instead of growing.

This wasn’t the only reason why South Africans were feeling the pinch and having to tighten their belts. The VAT increase earlier this year made an immediate impact, and with general living costs on the rise, along with some concerning hikes in the fuel price, many households have had to cut back on their spend, even in regard to things like food, transport and clothing.