Figures extracted from the national Deed Offices of South Africa for the information of the Rawson Property Group’s franchisees and clients reveal that the much-publicized increase in sales in the lower section of the residential property market is far more pronounced than most people realize.
Discussing this recently, Tony Clarke, the Rawson Property Group’s Managing Director, said that approximately 40% of all sales in South Africa are for property valued below R400,000 today and a massive 80% of buyers are looking for homes priced below R600,000.
“This,” said Clarke, “would appear to indicate that a significant number of lower income earners are now at last realizing their dreams of becoming home owners. The reality, however, is that far more are still unable to afford a home.”
The problem, said Clarke, is that the high percentage of buyers at the lower income levels do not qualify for bonds and most developers are just not capable of bringing new homes to the market at prices below R700,000.
“In the R700,000 to R1,2 million bracket,” he said, “there is now a flourishing development market, but, as indicated, such homes are too expensive for nearly 80% of South Africa’s potential buyers.”
This, said Clarke, is not “a healthy situation.”
“Many of us working in the property sector,” he said, “believe that a government truly committed to home ownership (as ours’ claims to be) should be assisting by implementing such measures as:
- Offering the banks guarantees on low value bonds – provided the applications have been assessed with the usual care and thoroughness;
- Donating some of the many thousands of hectares of land that the government owns to development; and
- Expropriating suitable sites (for a market-related price) and making it available to developers, possibly on a pay-later basis, i.e. when their projects are sold out.”
It has to be accepted, said Clarke, that not only does home ownership foster stability, but it also provides the home owner with a place from which he can run a business, which can greatly encourage entrepreneurship.
Furthermore, he said, once home ownership becomes a trend in any community, it has a marked ‘push-up’ effect on the market as a whole, for the simple reason that people will always aspire to better lifestyles, will upgrade their homes and will move up to more expensive units.
“New development also creates opportunities for estate agents to operate in areas where they have never been before and it is always heartening to see jobs created in this way.”
“However, without this sort of state assistance I have suggested, the low cost market will never come anywhere near being able to satisfy the pent-up demand for homes.”