Residential Property Sector Reaction: Moody's Downgrades

Reacting to the slew of Moody’s downgrades that sliced through the country’s financial sector and corporates as well as state-owned enterprises and local and regional governments, Lew Geffen, Chairman of Lew Geffen Sotheby’s International Realty, commented that they were “the economic equivalent of the lower decks of the Titanic filling with water”.

“Crucial Cabinet portfolio changes and national policy statements this year have done little to encourage international investor confidence in South Africa and this news from Moody’s is a further setback to any prospect of economic recovery in the medium term.

“The downgrading of the IDC, Land Bank and DBSA are particularly disappointing, because economic transformation will be further stifled or at least substantially slowed. This is the opposite outcome to the intended objective stated by the government as the reason for its radical policy shift, and economists will no doubt view it as an ‘own goal’,” says Geffen.

“In terms of the real estate market, a more depressed national economy directly impacts the rate of job creation, further squeezes household finances, tightens lending criteria and puts the ability to amass general savings and mortgage deposits beyond the reach of even more consumers.

“FNB’s May House Price Index notes that year-on-year inflation for the month rose slightly to 4.7%, ‘but remains a mediocre market, and adjusting for CPI inflation implies a negative growth rate in real terms’.

“It will obviously take a while for this latest round of downgrades to have a direct impact on consumers, but they will feel it more and more the longer it takes for international investor confidence to be restored.

“This will only happen with a sustained demonstration of responsible macro-economic policy management and good governance – neither of which appear to be on the cards for now.”

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 17 Nov 2017
      FWJK has announced the launch of its latest residential brand, the Lil’ Apple, which will be launched simultaneously in two developments in Cape Town and Umhlanga totaling 600 apartments. The Lil’ Apple is set to be a brand of FWJK’s New York style apartments which will be rolled out nationally.
    • 17 Nov 2017
      It’s been a tumultuous year on many fronts, with socio-political uncertainty setting the tone for much of South Africa’s economic activity yet despite this and seemingly counter-intuitively, the residential property market has held up well.
    • 17 Nov 2017
      The EAAB (the Estate Agency Affairs Board) recently claimed that around 50,000 illegal estate agents could currently be operating illegally.
    • 16 Nov 2017
      Penthouses are synonymous with New York – characterised by high-rise living that is decidedly luxurious and spacious. While exclusivity comes at a price, you can still create a “penthouse” look and feel in your existing apartment or even the upstairs bedroom of a double storey house with some clever design changes and styling touches.
    • 16 Nov 2017
      The area has long been popular with kite surfers and, with escalating property prices in Cape Town itself, is increasingly in demand with home owners who work in town, but are looking to invest in more affordable properties.
    • 16 Nov 2017
      Cape Town’s popularity as a world-class tourist destination has resulted in a spike in the number of homes available for holiday lets and fuelled investor demand for sectional title units with short term rental potential.
    • 15 Nov 2017
      Sappi, one of South Africa’s oldest global companies and a leading global supplier of sustainable woodfibre products, has moved its global and regional headquarters to a new site on the corner of Oxford and 14th Avenue in Rosebank.
    • 15 Nov 2017
      There’s an old saying in real estate that you should seek to make a profit when you buy, not only when you sell – and a large part of succeeding at that endeavour is buying a home in an area with desirable features that will enhance the resale value of your property.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us