Why is it that, although estate agents throughout South Africa repeatedly report that the vast majority of people with whom they deal genuinely aspire to become home owners, in reality less than 35% are likely to realize their ambitions within the next ten years?
Discussing this matter recently, Tony Clarke, Managing Director of the Rawson Property Group, commented that those who criticize South Africans for being lax about saving and too inclined to “want it all and want it now” often gloss over the very real financial predicament in which, not only the poor and the previously disadvantaged, but also a great many middle class South Africans today have found themselves since the 2008/2010 downturn.
Recapping on South Africa’s economic performance since the year 2000, Clarke pointed out that in that year US$1 had cost R6,94. Today the exchange rate stands at R11,90 and is likely soon to go through the R12 mark. The rand’s status vis à vis the Euro and the £ is equally weak.
In the same period (i.e. since 2000) annual Eskom charges have risen year-on-year from 5,5% to a peak (in 2011) of 25,8% - and right now stands at close to 12% - while fuel costs in that time have quadrupled.
In circumstances like this, said Clarke, it is not altogether surprising that South African household debt is still equal to 70% plus of GDP and slightly more than half of South Africans applying for mortgage bonds are automatically disqualified by credit impairments.
Nevertheless, said Clarke, the South African residential market has recently proved itself to be an alternative economy (of sorts), operating with a predominantly bullish outlook and with the ability to buck the trends and to be resilient – and this, he said, has made it an increasingly good investment/asset class.
“Looking at the economy right now, it is very difficult to predict a significant upturn within the next three or four years,” said Clarke, “but unless the scenario changes entirely, if and when it comes, property ownership will increase and everyone will benefit from that. We can only hope that this comes about in the fairly near rather than the distant future.”
For more information contact the Rawson Property Group on 021 658 7100.
