Concerned about land expropriation? There’s no cause for panic

Concerned about land expropriation? There’s no cause for panic

Category Property market overview

Land expropriation without compensation (LEWC) has been a hot topic in recent months, with the effects of the uncertainty definitely reflecting in property decisions by both buyers and sellers.

Much of the concern can be traced to a lack of understanding around what exactly such a policy – and change to the Constitution – would entail.

This uncertainty had buyers and sellers nervous about the future of their properties (and perhaps rightly so), but as issues around this proposal become clear, it’s also safe to say that it is business as usual for the property market.

The international market optimism around ‘Ramaphoria’ in South Africa would not be as high if this policy was, in fact, likely to affect ordinary homeowners.

President Ramaphosa has himself said that he would not allow the LEWC process to affect South Africa’s financial institutions that have billions invested in both residential and agricultural property.

Not all doom, gloom and expropriation

While it’s now clear that there is no cause for panic, there has certainly been a discernible shift in confidence in residential property markets. Silvana dos reis Marques, Manager at Leapfrog Property Group, Pretoria East, notes that home sales targets were noticeably down in March and April, and ascribes this to a reluctance by clients to put pen to paper at the moment due to concerns around land expropriation.

But it seems this panic is set to be short-lived. There’s been a major jump in positive consumer sentiment recently, notes John Loos, FNB Household and Property Sector Strategist. While FNB statistics indicate that emigration-related selling was still high in the first quarter of 2018 it is likely that the current high rate of emigration-related selling is due to a lag before the impact of improved sentiment becomes evident.

Don’t get caught up in fake news

Misleading reports and fake news on social media only serve to perpetuate the panic and appears to contribute to the decline in property sales, Marques notes as she urges people to confirm and verify information before sharing it on a social media platform.

“There’s certainly a lot of uninformed hysteria being perpetuated, specifically on social media,” concurs Bruce Swain, CEO of Leapfrog Property Group. “At no point has government indicated that it would be pushing through a policy in which residential homes would be seized. Expropriation of property (in general) without compensation also contravenes Section 25 of the Constitution, which is no small barrier. Yes, there is a chance that land could be expropriated, but even if this comes to pass there are many legal hoops to jump through. As far as residential property is concerned our message is that it’s business as usual.”

The recent changes in our politics can generally be seen to be positive, and this will reflect in the property figures as well.

“We really urge both buyers and sellers to educate themselves on the issue of land expropriation before making fear-based decisions about their futures,” believes Swain.

Author: Leapfrog Property Group