Property industry's reaction to Mboweni's mini budget speech
Category Property News
Posted 7 November 2018
Finance Minister, Tito Mboweni's maiden Medium Term Budget Policy Statement (MTBPS) highlighted the difficult economic and global environment South Africa is currently facing.
"The real estate market is susceptible to economic uncertainty and the minster needs to restore confidence to ensure local and foreign investors are willing to increase purchasing activity," says Richard Gray, CEO of Harcourts Africa.
Economic growth predictions for this year have been halved from 1.5% to 0.7%, tax collections are down, unemployment is dire and government debt is now expected to rise to 55.8% of GDP by the end of this year.
Dr Andrew Golding, chief executive of the Pam Golding Property group, says it was "straight-talking as expected" and the minister's medium term budget speech sought to inspire investor and market confidence in South Africa by reinforcing the five measures recently highlighted by the President in order to stimulate the economy.
"It is time for action," says Richard Gray, CEO of Harcourts Africa, and we need to see the results of policies and implementation plans otherwise economic stagnation will continue to remain a major concern. "Of course, a concern remains that Treasury's low growth means debt service costs will rise to 18% of all government spending in 2026 - which translates into almost R1 out of every five going towards paying off loans."
It is imperative the minister clamps down on wasted expenditure and tries to mitigate the factors leading to drastic economic cycles that create long-lasting fluctuations, says Gray. "The real estate market is susceptible to economic uncertainty and the minster needs to restore confidence to ensure local and foreign investors are willing to increase purchasing activity."
Youth are our future
"Youth are the future of South Africa," says Dr Golding. "From a housing perspective, extremely welcome is the announcement of R1 billion in housing subsidies to help low to middle income households gain access to affordable home loans, to enable them to acquire their own homes and achieve security of tenure as well as a nest egg for the future."
Industrial parks and renewable energy projects
"Also positive is the R669 million to be invested over the medium term to revitalise government-owned industrial parks in township areas, which will boost employment opportunities and hence ultimately local housing markets," says Dr Golding.
Against a backdrop of rising costs of electricity, renewable energy projects to be introduced are set to make a meaningful contribution to sustainability, including the construction and housing industries, says Dr Golding. "Increasingly, homeowners are embracing the principles of sustainable, 'green' building and retro-fits, with such features adding value and desirability to properties."
Consumer confidence flags - but it's a buyer's market
Herschel Jawitz, CEO of Jawitz Properties, welcomed the message that for now taxes will not be increased, which will give cash-strapped consumers a little less to worry about, however, apart from this, there was very little news to uplift consumer confidence. "There was some better than expected news with regard to the latest inflation figures coming in at 4.9% - still within the 6% upper limit - which will stave off an interest rate increase."
Until consumers feel better about the medium- to long-term situation in the country, the residential market will remain flat with the imbalance between supply and demand widening across almost all segments of the residential market, says Jawitz. "There are sales to be done for sellers who are realistic about the market and what their property is really worth, but for the meantime, the residential market remains firmly a buyer's market."
The irony is that for buyers who are prepared to buy in the current market, it offers the best value in terms of prices since the market crash in 2008, says Jawitz.
Dr Golding notes that it is gratifying to hear of measures to ensure accountability in government, so that taxpayers can be assured that their hard-earned money is put to good use in infrastructural improvement, education, job creation and the agricultural sector - the latter especially relevant in terms of food security for the nation.
"We look forward to realise the potential benefits inherent in the revitalisation of public infrastructure, including road networks - so critical for the development of key transport corridors, facilitating ease of commute and access to major centres and hubs for citizens from all walks of life," says Dr Golding.
And finally
Dr Golding says that an economic stimulus will have meaningful spin-offs for all - including the housing market - but most importantly in the current economy, for increased investor confidence and employment opportunities. "Unemployment is a key imperative, especially given the high percentage of unemployed youth who after all, represent the future of South Africa and who are our aspirant homeowners.
"Enabling and encouraging them to acquire their own residences in turn bodes well for their future financial stability while in turn, impacting positively on the housing market in general. For after all, the housing sector is a significant contributor to government revenue generation via transfer duty, municipal rates and taxes and construction."
source
originally posted 29 October 2018
Author: Wendy Wentzel
