Supplementary Budget and real estate
MAIN IMAGE: Dr Andrew Golding, chief executive Pam Golding Property Group; Berry Everitt, CEO Chas Everitt International Property Group; Gerhard Kotze, managing director RealNet
South Africa is facing a long and tough road to economic recovery. Finance Minister Tito Mboweni’s Supplementary Budget maps out how this will be achieved, and it holds a number of positives for the real estate industry say property leaders.
Prioritisation of infrastructure development – Dr Andrew Golding, chief executive of the Pam Golding property group, says the prioritisation of infrastructure development is positive news. “This strategy, together with the re-energising of public-private partnerships, augurs well for increased confidence in our economy among investors – both local and international, and the business sector, with broad spin-offs for job creation, industry, communities and ultimately, the property market,” he says.
Possible further reduction in the interest rate – There are indications that interest rates will be lowered again next month or in September, to stimulate household and business spending and boost economic activity. Says Berry Everitt, CEO of the Chas Everitt International property group, “This will be positive for homebuyers and property investors, because it will make it even easier to qualify for home loans. Home prices are also declining as expected, so the market over the next few months will present the best purchase opportunities seen in more than a decade”.
However, he added that it would have been good also to see more direct support for existing property owners at this time, perhaps in the form of a tax reduction that would help those who are struggling to hang on to their homes, or could be used by landlords to offset some of the rent that many have lost due to the lockdown.”
Gerhard Kotze, managing director RealNet estate agency group, says the biggest challenge the country faces in trying to repair the economic damage done by the COVID-19 pandemic is saving jobs and creating new employment which is obviously vital for both the rental and purchase sectors of the real estate market.
He highlights as a positive the Loan Guarantee Scheme for small businesses. “This is now up and running and has already advanced some R10m to help companies that lost money during the lockdown or that need help to restart. Every enterprise that can be saved also means jobs that are being preserved,” he says.
Secondly, the R100bn allocation over the medium-term for specific programmes to promote new employment. “This is critical with the unemployment rate having reached 30,1% at the end of March being set to increase even more over the next few months. These programmes include a revamped public employment programme and the presidential youth employment intervention. A total of R27,7bn has been found to support these initiatives in the current financial year,” he adds.
He also finds the focus on infrastructure projects a positive as such projects are usually also major job creators. Lastly, he highlights the decision to recapitalize the Land Bank. “The R3bn involved is a relatively small expense for the fiscus but will save many farmers from going under – and in the process ensure continued food security for the country while saving many thousands of agricultural jobs,” ends Grobler.