Recent developments in the area of inflation and interest rates have in many ways resembled the environment leading us into the Global Financial Crisis in 2008/9, says John Loos, property sector strategist at FNB Commercial Property Finance.
“Whereas the GFC was preceded by a few years of above 5% economic and real household disposable income growth, the current period has been preceded by almost a decade of economic growth stagnation, and then a 2020 lockdown contraction of major proportions.” All round retail property affordability in the years building up to the current rate hiking period was significantly worse than prior to the GFC, too, he said.
“In the post-pandemic negative column, we have economic shrinkage, an office vacancy backlog to fill, and an as-yet-unknown percentage of the workforce that will continue to work remotely or in a hybrid model,” he said. “Plans passed for the twelve months to June 2022 remain 69.9% down on the twelve months to June 2019 and 74.2% down on the twelve months to June 2018,” said Dart.