The global financial recession, says Sean McCauley, Rawson Properties director in charge of their northern territory, has been countered in a variety of ways by governments but the last three years have shown that one of the most effective has been the assistance schemes to first time homebuyers.
'Obviously,' he said, 'in many cases these relief packages have to be of relatively short duration but our investigations show that whenever they have been initiated they have been highly effective. Here in South Africa we could learn much from those who have implemented such schemes'
After the collapse of the housing market in the USA, said McCauley, the Obama government allowed all states to give an $8 000 tax relief to any first time homebuyers and to anyone who had not owned a home for the previous three years.
The latest feedback, says McCauley, shows that in the first year of this tax relief measure, 532 000 people made use of it '“ and this stimulated the flagging residential market to achieve a 4,2% average value growth off the low base it had it had by then reached.
Since the relief package was withdrawn, house price growth has reverted to a low 0,5% year on year, which equates to an 85% drop and there is as yet little sign of this accelerating.
In Arizona, USA, said McCauley, a scheme enabled the state to give an upfront cash deposit to purchasers through a once-off down-payment assistance programme, while in California another assistance package gave a tax credit for any newly built house bought, thereby helping home builders and developers to survive the downturn.
In South Africa, said McCauley, the first time homebuyer assistance is limited to the affordable market and to very low income earners. This, he says, restricts its ability to alleviate the current difficulties.
'As the suffering caused by the recession has been at all income levels, I would be in favour of a tax subsidy or down-payment assistance being available to anyone who is a genuine first time homebuyer,' he said.
The beneficial effect of such a relief measure, said McCauley, would be felt not only by the buyers themselves but also by the financial institutions who are still desperate to sell large stocks of repossessed homes. It would also help distressed homeowners looking to offload properties on which they can no longer afford the bonds and home builders, some of whom can still cater for the stringent demands of the low cost first time buyers market. In addition, with an amendment to the tax law, the package could help those who have lost homes as a result of bond payment difficulties but who are low looking to reinstate themselves as homeowners.
McCauley said that in every sort of crisis, the man in the street has a tendency to look to the government for help and he himself has in previous statements criticised this '“ but, he said, the housing sector has always had to be treated as a 'special case' because homeownership gives the owner dignity and a sense of purpose and fosters political stability. Equally important, house builders provide more employment per rand invested than almost any other industry, agriculture and mining not excluded.
McCauley said that the difficult economic conditions of 2009 '“ 2010 are still apparent in the residential market but he sees signs that the recovery is on the way and likely to be in full swing by 2012 - 2013.
'The sort of broad-base first time home assistance that I am asking for could, therefore, be in place for less than two years '“ but in that time it would have huge impact, which is badly needed to speed up the recovery'
For further information contact Sean McCauley on 011 463 1092 or email sean@rawsonproperties.com.
