MUNEXIT?

MUNEXIT?

/in /by

Never heard the word?

Well, BREXIT stands for: Will Britain exit the European Union? MUNEXIT stands for: Will the ANC exit the municipalities of Tshwane, Joburg and Port Elizabeth? One, or two, or all three and/or in any significant proportions?

The lovely thing about democracy is that you don’t know. Many polls have seen the DA and the ANC neck-and-neck but, like the polls that had the world on a high 48 hours before BREXIT, they could be wrong. Then, of course, even before the result, we have the political commentators talking about who would be good bedfellows – the ANC and the EFF, the EFF and the DA or the DA and other smaller parties etc, etc. Finally, there is the talk of the smaller parties falling away from the South African political landscape as the larger parties warn voters that a vote for “small party” means they could not have enough to get into Council but the ANC could have one more proportional vote for their candidates.

Politics is not boring and one thing we know, this is the most important election since 1994 and probably the forerunner of a few “most important elections” to come. The reason? The ANC is fractured and caught between reason and the President – it’s centre, so critical to political power in any party, is cracking. No attempt to heal the rift has been successful and they are now dependent on a massive show of support in Gauteng even as I write.

On 31 December last year, Clem Sunter gave us 10 Flags to watch this year. A number have been playing out in global economics and politics. Very interesting that BREXIT wasn’t mentioned but SA Elections 2016 was. Here are the Flags and I’m sure, in no particular order of importance:

  1. The oil price [into the $30’s, back to $50 and now early $40’s [and I read to day the mega-oil companies are making mega-losses whilst the over-supply continues]
  2. Global temperatures, floods and droughts [we have not been left unscathed]
  3. The US Federal Reserve Bank [read: “US interest rates”]
  4. The Chinese economy [who could ever forget those January collapses in the Chinese stock market where falls were faster that the “close the market” stop-losses could trigger in?
  5. The war in Syria [Europe has changed for many, for ever]
  6. Vladimir Putin [“Mr Putin is a strong leader who wants to restore the superpower status”]
  7. The American presidential election [Donald is chosen but Ted Cruz won’t even endorse him and Hilary may be sanctioned before she even has a chance to run – amazing]
  8. A global pandemic [the Vika virus hasn’t just concerned the Pro golfers and antibiotics failed to heal a person in the USA this year – all’s gone very quiet]
  9. The municipal elections in South Africa [THE FULL STORY IS RETAINED, FYI]

“The results of these elections will indicate to what extent all the controversies of 2015 have affected the popularity of the ruling party and its leadership. The flag is not just about the percentage of the votes that each party receives, but the total turn-out too in terms of judging the outcome of the next general election. Meanwhile, the Rand/Dollar exchange rate remains the best indicator of the world’s take on developments in South Africa: whether we are consolidating our position in the Premier League of nations or meandering downhill into the Second Division.”

So there you have it, little ol’ SA gets into the List of 10 once again. We certainly do always box above our weight!

The one thing we cannot do is debate the stats when it comes to well-run municipalities. The DA runs the greater majority of them in the Top 10. More importantly for this blog, is what happens in well-run municipalities is that property prices rise. In fact, I would stick my neck out and say they rise at a level greater than the national rate over the long-term – that’s a dead cert in Cape Town. Probably the reason is simply that people want to live there and are prepared to “pay up” to do that.

That said, the most recent [June 2016] House Price Indices of the banks have been an interesting read:

  • According to ABSA, the Middle segment has shown the most resilient growth dropping from 6% in February to 4.9% in June 2016. Overall house price growth so far this year has been 5.7% and points to a negative growth of between 2 and 2.5% in Real house price growth for the year.
  • FNB remains quite positive. “…….little cause for concern at levels of financial stress” is the way John Loos expresses his introductory remarks in his Mortgage Barometer of 19 July 2016. However, he goes on to say that their Household Debt Service Ratio is “under pressure”.
  • Standard Bank is somewhat of an outlier but one needs to bear in mind the different ways banks measure house prices. They record house price increases at 7.3% due to the fact that credit extension by the banks remained robust for longer than expected.

A recent report from Homeloan Junction shows that volumes of Applications for bonds have remained resilient and even better than last year. That’s an excellent statistic and well done to the Team! 

 

So, why the interlude around the house market and its prices? People like to live in safe, clean environments. They like their kids to go to school in well-run establishments and when sick, to be cared for in sanitized, proficient hospitals. Doesn’t that sound like you and I? It’s true as well that the only way we can influence the current status of these facilities, is by using our vote. Never mind the conjecture about the ANC, the DA, the EFF and the Small parties, all we can do is put our “X” where our conscience leads us. What an act of utter individualism, what personal power with responsibility. Once every 4-5 years, we get to change the world; well, at least the one in which we live. How fascinating the process and how knife-edge it has become for some leaders!

May 3 August 2016 ushers in the local government we deserve as citizens of this beautiful, tortured country. May White and Black, Coloured and Indian, every valid citizen, go to the Polls en masse and vote with reason and conviction. No greater truth exists than that property is more valuable in well-managed municipalities. And the choice of who manages our towns and our Provinces is solelydriven by our vote.

As for the process and the outcome, we will know by next weekend how things have gone. What then follows is anybody’s guess. But, to return to Clem’s 10 Flags blog, a closing thought for you, our friends in property:

“If you are a pocket of excellence, you will thrive irrespective of how 2016 pans out and which scenario is in play. Foxes adapt and win!”

Yours in Property.

Jack

Jack Trevena
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