The way that many consumers react to any industry is largely affected by international feed from the news and economists, says commercial director for Asrin, Shiraaz Hassan, but, he says, although global issues will always affect South Africa, it is the local economic stresses that need to be addressed.
The mining, agricultural and transport sectors tend to be very volatile, where there are many strikes, and this has a knock-on effect of tighter labour laws, less money being put back employing people, employers being reluctant to take on new staff because of the restrictive labour laws and the vicious cycle continues of lower earnings and higher unemployment rates.
“I feel government should seriously be investigating alternatives and looking at other ways of dealing with labour issues,” he said. “The reality in a capitalist economy is that there needs to be freer labour laws for an employment system to work. There will always usually be a minimum wage but the higher wages often demanded by some organisations striking are not sustainable.
“We need to work towards solving problems and not wait until things are so bad that they are difficult and costly to remedy. It should never reach the stage of emergency rescue operations having to be put into place,”
Countries that could be setting an example are Brazil and China. Brazil’s economy is still growing, albeit not as in the height of the boom, and China’s economy has adapted to the slowdown and growth is minimal but steady.
“A success factor, I feel, is that these countries have far more flexible labour laws and more willing workers for minimum wage.”
The best way to grow GDP is to create jobs, keeping the work ethic strong and knowing that the job will only be there while the work is being done properly.
“People in South Africa generally don’t realise how lucky they actually are: an efficient tax collection system keeps the country’s income stream steady and allows government support structures such as the proposed NHI to be implemented. The downside here is the fact that labour laws protect many who are not working efficiently,” he said.
Economic news updates overseas show that the number of unemployed people in the US has dropped by approximately 42 000 in the last month and job supply is up. Although a small improvement, these statistics are progressive in light of the all the doom and gloom surrounding global economies.
Japan’s CPI numbers are up, said Hassan, and the large producing economies are all reporting steady growth.
“South Africa usually follows suit economically so I feel that demand will steadily increase in the property market as things improve globally.
“January, February and March are relatively slower periods when going back to the same period over the last few years. The activity in the sectors that Asrin build homes in has been good and the demand for products is still there. What we have found is that purchasers are far more educated and understand affordability, and a thorough financial due diligence is conducted by many purchasers prior to signing a deed of sale. The other notable change is that we have noticed an increase in rentals in the first quarter,” he said.
The demand for affordable housing, i.e. in the R400 000 to R600 000 bracket, remains strong but certain banks are still hesitant to relax their criteria in terms of affordability.
“These banks’ lending policies need to be reassessed, in most cases in this bracket buyers are just falling short of qualifying for bonds and their loan applications are being rejected. There is no leeway and there needs to be a more flexible system designed for the first time home buyer within the affordable bracket,” he said.
“We at Asrin have always been positive about South Africa’s prospects and the property market as a whole. The market will always be demand driven and the best thing to survive in any business is to continue what you do best and manage the challenges as best you can,” said Hassan.