It’s business as usual - if not better business this year compared to last in the property market. Photographer: Armand Hough/African News Agency(ANA)
It is business as usual for the property market, despite Expropriation Act of 2024 noise, says Samuel Seeff, the chairman Seeff Property Group.
In fact, Seeff says the property market has started this year on a better footing compared to last January following three successive interest rate cuts which have hugely boosted affordability and confidence in the property market.
He said that residential property owners, buyers, sellers, and investors should not be concerned about the recently enacted Expropriation Act of 2024.
Seeff said the new Act is very specific in terms of the conditions for expropriation, and, importantly, the protection of the “property clause” under Section 25 of the Constitution remains in place.
“The concern is that expropriation has been sensationalised, and conflated beyond the actual implications of the Act,” Seeff said.
He said arbitrary property deprivation is specifically prohibited.
“While the Act provides for expropriation at nil-compensation, there are checks and balances contained in the Act. This includes that it must be in the public interest, and follow extensive consultation and negotiation with the courts having the final say if no agreement is reached.”
The Act, which replaces the outdated Expropriation Act of 1975, was largely expected by the property industry. It has been in the works since 2018, and was passed by Parliament in March last year.
Seeff further said that President Cyril Ramaphosa and the ANC have also been firm in their commitment that no land grabs of whatsoever form will be tolerated. The aim is for expropriation to be lawful, and done with careful consideration so as to promote economic growth, development, and investor confidence.
The property group said nil-compensation is also specifically confined to public interest. “Four potential scenarios are envisaged in Section 12(3), being (1) where land is held solely for speculative appreciation without productive use or development intent; (2) state land which is unused, and unlikely needed for future core functions: (3) abandoned land where, despite being reasonably capable, the owner has demonstrably relinquished control; and (4) where the market value of the land is less than, or equal to the state's investment in its acquisition and improvement.”
Seeff pointed out that the Act is also subject to the Constitution, and it is expected that it will likely face rigorous legal challenges.
“As for residential property, and having regard to the Zimbabwe experience, Seeff notes that it never involved residential homes. Compensation has also since been paid for the expropriated farms. There are also additional implications when it comes to residences such as the banks and mortgage loans over properties.”
Seeff Property Group said it therefore remains business as usual for the property market with the legal protections of private property in place.
This morning in the Nedbank Daily market snapshot, Nedbank CIB research analyst Reezwana Sumad said South African Government Bonds (SAGB's) managed to finish well off their worst levels as both Ramaphosa and the Democratic Alliance (DA) moved swiftly to limit the damage from US President Donald Trump's misconception about the Expropriation Bill and his threat to cease all funding to the country.
“The R2030s and out closed officially between 9,5 basis points (bps) and 14 bps higher, with the steepening bias intact. The R186s closed almost unchanged.”
It said that it is a new year, and many young professionals will be looking to get their foot on the property ladder, and what better time this was. “There is excellent value for buyers in the inland provinces, including Gauteng which usually sees the highest influx of first-time buyers in the country,” it added.
While the traditionally strong areas such as the Western Cape and coastal hotspots are expected to enjoy a good year, Seeff said they expect the Gauteng and inland markets to gain good momentum, and once stock levels start coming down, to see property values in those areas starting to rise meaningfully again.
Last week, the North West University's Economics Professor Waldo Krugell, said Ramaphosa’s signing of the Expropriation Bill is not, on the face of it, the crisis that some people make it out to be.
“It is important to remember that the state has always had the power to expropriate. The process of updating the law began in 2004, and last week's signing of the Bill is not directly related to the debate on expropriation without compensation of 2017 and 2018. The new Bill replaces the original law of 1975 and defines the circumstances under which the state can expropriate land in the public interest. It also defines the process by which the state must engage property owners and compensate them. The law will now be applied and interpreted by the courts,” Krugell said.
He further states that, although the reaction to the signing of the Bill might have been taken out of proportion, a clearer, more focused message would have done wonders to allay market fears.
The professor said the fact that this sometimes sounds like a crisis says something about South Africa's politics. “People feel the state can expropriate, but not everyone trusts this government to do so fairly. Political analysts say the President signed the law now because he had to send a signal to ANC loyalists that he still supports their agenda of the National Democratic Revolution. I do not know if that faction of the MK Party can still be persuaded, but the signal does nothing for the unity in the Government of National Unity.
“For the sake of investors and the economy, one would much rather hear a focused message of market-oriented reform. Research shows that policy uncertainty is bad for investment and low levels of investment are bad for economic growth. Faster growth is all that can create the opportunities that can reduce the inequalities of the past,” he said.
PROPERTY