Today's reports that fuel prices are expected to rise even further in October, largely due to the sharp rise in crude oil price, will definitely have an effect on the property market.
Sources are saying the department of energy published information today that the price of gasoline 93 (ULP & LRP) in Gauteng might rise by 26 cents per liter in the first week of October with the price of diesel expected to rise by 37 cents per liter.
Consumers who are already under financial pressure and in a price pinch due to food cost highs, transport cost increases, stricter banking lending criteria and other macroeconomic factors will feel it even harder.
The rental market might experience it directly as it is usually more prone to react to economic fluctuations. The difference usually comes in where people who rent are able to make changes to their financial situation by scaling down their home choices. Whereas a home owner’s process cannot be changed quickly.
The greater effect on the rental market in the past has been that the demand for rental properties close to business districts, schools and amenities also increases in an attempt to curb excessive transport costs.
The residential sale market is not usually susceptible to short-term changes like fuel price increases and decreases, however there are a percentage of buyers balancing on the decision whether to buy now or not who might be more hesitant to make a financial commitment now. However, short term cycles usually don’t play a major role.
Harcourts Africa Chief Executive Officer
Drought takes severe toll on farming property market
The next few months will be testing for the Western Cape’s agricultural property sector as it struggles to stand steadfast in the face of unrelenting pressure from the ongoing drought, which has severely hit the region.
Some markets are already suffering declines while others are reported to be surviving the challenges.
All agricultural commodities in the province are struggling due to the water crisis. Carl Opperman, chief executive of Agri Western Cape, says damage is so far estimated at R14billion.
In the livestock sector, grazing and feed shortages have already resulted in massive culling, and harvest prospects for the deciduous sector are showing decreases in crop volumes. This is resulting in both the import and export markets taking strain.
“The industry is an important generator of valuable foreign currency inflow, which is now also under pressure. The estimate for the viniculture sector shows smaller crops than 2017. Grain yields have been far below average, with no yields at all in certain areas.
“Agriculture’s water supply has been curtailed by between 60% and 83%. In the Lower-Berg River region, producers’ water quota has been depleted. No water is available for the after-crop irrigation of orchards and vineyards, and this will have an effect on next year’s harvest,” says Opperman.
The drought is a major risk for the Western Cape agricultural economy.
This phenomenon has been a major factor in agricultural property performance in the parts of the country worst affected, especially the Western Cape, where it has “kept a lid” on prices over the past few years, says Joop Coetzee of RealNet Plotte & Plase. Despite this, demand for small holdings is “vibrant” and interest in large farms has “picked up”.
In addition, even though Coetzee says the agricultural property market was quiet in the last quarter of 2017, it has “revived substantially” since political and presidential changes.
Land claims have also been an issue in the market for years, but sales have not slowed since the Land Expropriation Without Compensation motion was passed in Parliament, he says, adding there has also not been a rush of owners wanting to sell farms.
“It remains to be seen if this scenario will change over the next six months, but there is a belief land reformation will proceed in an orderly, considered and legal manner so as not to threaten the country’s food security or the financial institutions that support the agricultural sector. Consequently we do not foresee a decline in interest. Serious farmers will always be interested in good land.”
Although the land reform proposals have not yet resulted in any noticeable reduction in interest shown in the larger commercial farms either, Daniel Joubert, agricultural property specialist at Harcourts Winelands, says the very dry conditions have had a significant impact on the market. This is because their value is directly related to irrigation water availability and supply volumes.
“Farms are sought after in areas with a good water supply as opposed to areas in which supply has been restricted.”
Joubert says, for the first time, agricultural water supply has been restricted in many areas this year. It has created a new baseline of water security on these properties and this is adversely affecting their desirability. Buyers in the commercial segment are focusing their interests on those areas not been affected by water restrictions, and this has led to properties in these areas being in demand.
Currently, the market for smaller lifestyle farms is also slow, says his colleague James Visser, attributing this to political uncertainty and widely-publicised farm security issues.