Real Estate Investor Magazine South Africa December 14/ January 15 | Page 45

By PROFESSOR FRANCOIS VIRULY

INSIGHTS

How will the economy
affect the property sector?

T

here is no better time to examine the state
of the property sector than right now, states
property economist and University of Cape
Town’s head of property studies,” Professor Francois
Viruly. The reality of a global economy that is still
struggling is stark, as the fundamental issues that led to
the financial crisis in 2008 remain in place.
South Africa is in no better state than the rest of the
world and the country continues to operate in a difficult
macro-economic climate. The country and property
sector have, to a large degree, relied on the growth of
the middle class, but there is an inherent danger present
in depending on a heavily indebted middle class. This
risk has now come to fruition - buying power in the
middle class has diminished as this sector continues to
pay off debt, resulting in current weak demand.
That said, while it is simple to take a look at the
GDP growth numbers and bemoan the state of the
economy, pockets of growth do exist, and time is a
great healer in property. One needs only to look to the
major cities to witness examples of this growth. There
is an u