From the Desk of the MD - March 2019
Category From the Desk of the MD
As we all know, the real estate market is currently a bit like a sailboat in the doldrums, bobbing along without much direction as most consumers wait and watch for the fresh breeze that will hopefully follow the general election in May.
However, a lot of local investors are already putting money into rental housing and new housing developments, guided by some positive indicators contained in the recent Budget presentation. These include the clear support of Treasury (and government) for private property ownership, as indicated by the allocation of the first R1bn of an eventual R5bn worth of funding for the new Help-to-Buy subsidy for first time home buyers, and almost R4bn for emerging farmers who wish to purchase their own land.
Finance Minister Tito Mboweni has also indicated that we can look forward to new high-rise social housing developments in and around the major metros soon, as government starts to implement its integrated strategy to provide affordable accommodation for a rapidly urbanizing population.
This strategy, which will bring many thousands of people into the formal housing ambit for the first time, also includes the rapid release and rezoning of government-owned land that is close to city-centres and suitable for housing, a R15bn allocation for grants for informal settlement upgrading projects and more than R30bn for the upgrading of non-toll roads.
Meanwhile the Development Bank and Infrastructure Fund will disburse more than R500bn over the next few years to water supply, solar geyser, student housing and other infrastructure projects - and the hope is that they will be able leverage much more than that as they develop public-private partnerships with both local and foreign investors.
Government is obviously hoping that all these projects will be the key not only to improving SA's built environment and quality of life, but also to energizing small business and starting to generate the economic and employment growth that the country urgently needs to achieve, along with the stabilization and restructuring of its State-Owned Enterprises.
This overall vision - which is essentially an updated version of the National Development Plan adopted in 2012 - will hopefully also please the international ratings agencies, save SA from being downgraded to junk status and enable the country to regain the confidence of even more international investors.
This is clearly what those who are currently investing in housing think will happen, and if they are right, even more jobs will start to materialise, housing demand will rise and they will reap the rewards as the real estate market experiences a significant upturn.
Meanwhile, consumers should be smiling at the recent downward trend in the inflation rate, which means that there is less likelihood of an interest rate increase later this month - and that they can use the time before the election to pay off more debt, improve their financial situation, and be ready to buy a new home as soon as the dust has settled...
Author: Gerhard Kotze
