What drives SA's desire for home ownership
Category RealADVICE
Recent research has once again shown that home ownership is not only an important means of building private wealth, but also has significant social implications and should be encouraged and facilitated as far as possible.
The research was conducted by NAR Chief Economist Lawrence Yun and research economist Nadia Evangelou and appeared in the Journal of the Centre for Real Estate Studies at the end of last year. It found that the biggest social benefits linked to home ownership are:
- Enhanced health due to the positive physical and mental effects on owners who feel more in control of their future, especially when the property market is good (although a depressed market can have the opposite effect). In addition, children have been found to have healthier and happier lives when living in an owned home versus a non-owned one, even when including income and education levels as influences.
- Better education. The children of home owners are less likely to drop out of college and school, and the owners themselves are more likely to be involved in a parent- teachers association or school governing committee.
- Less crime. Residents are less likely to experience instances of all sorts of crime crime when living in areas with high levels of stable ownership.
- More civic participation. Home owners are more likely to vote in elections than tenants, and play a role in community organisations like Neighbourhood Watch or their local Ratepayers Association.
- Higher net-worth. Home owners acquire more savings and wealth than tenants. In fact their net-worth is 34 times greater than that of a tenant on average. Many also believe that owning a home is helping them achieve both life and financial goals.
Although this research was specifically aimed at the US market, there are also many examples in SA of home ownership generating huge family and social benefits - in inner city areas that have been regenerated and where run-down factories and office blocks have been converted to trendy new apartments and workspaces, for example, and in townships where many long-term residents have now received title deeds confirming ownership of their properties and are able to leverage these to start building up wealth for their families.
So it is not really surprising that millions of South Africans still aspire to own a home of their own, especially those who could not legally own one before 1994. Indeed, Mike Schussler, chief economist at http://www.economists.co.za/ , recently noted how rapidly home ownership has increased among black households, having reached 50% of households in 2001 and 57% of households in 2017, compared to 69% of white households in 2001 and just 45% of those households last year.
He also calculated that at least 6m new homes have been built in SA since 1994, including 1,625m built by the bigger municipalities and 4m RDP homes, but also hundreds of thousands that have been built by owners themselves in places like Diepsloot, Orange Farm and many small rural towns.
This brings the total number of owned homes in SA to around 9,2m currently and when one takes all the figures into account, they reveal that about 63% of all SA households own their own homes or are paying them off - and that about 33% of households actually own more than one home. And what that means is not only that that SA has one of the highest home ownership rates in the world, but that South African consumers have a very clear appreciation of the benefits that home ownership offers and why it should be encouraged at the highest levels.
Author: RealNet
