POLITICS: State Of the Nation Speech ‘Exciting’ for Property
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For the real estate market, the State of the Nation speech delivered by President Zuma could hardly have been more exciting - because of its strong focus on job creation.
So says Harcourts Africa CEO Richard Gray, who notes: "Job insecurity is probably the single biggest factor operating against the expansion of home ownership at this stage, not only because it makes potential buyers think twice about putting pen to paper, but because it makes the banks extremely wary of home financing.
"However, it was clear from the President's speech that job creation is now right at the top of the Government's list of priorities, and this will undoubtedly give the real estate sector an almost immediate boost, even if it does not translate right away into millions of new homebuyers."
The reason, he says, is that where there are new jobs, there is typically an influx of new people needing accommodation, which is immediately good for the rental market, and the people who have invested in developing or buying this type of housing. "It also stimulates more development, and further job creation. This is currently very evident, for example, in towns where there is major new mining activity or a big new infrastructure project such as a power station.
"Then over time, as they grow more secure in their employment, many of these tenants are likely to become first-time homebuyers, and then second and third time homebuyers or property investors themselves, steadily driving up housing demand and value growth in the process.
"The huge job creation initiatives that were announced by the President are thus about the best news the real estate sector could have received at this time."
Business News Sector Tags: Property| Local Government|