State of the nation and the impact on property

Addressing the nation, President Jacob Zuma made some interesting comments that are likely to have a major impact on the property industry in the future, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.

He notes that an issue that has been affecting households throughout South Africa is the ongoing power constraints which have put a large strain on the economy over the last year. The energy supply problems have impeded economic growth, which is likely to have a domino effect on the property market if the matter is not resolved. Zuma addressed this issue stating that government has made this a top priority and will stabilise Eskom’s finances to enable the utility provider to manage the current period. In this regard, government will honour its commitment to give Eskom around R23 billion during the next fiscal year.

“Hopefully this will assist in resolving the issue during the short term, while the country continues to seek a long term solution through alternative energy supplies,” says Goslett. “Households have to deal with increasing electricity tariffs, which has largely outweighed any positive impact made by the drop in fuel prices. A solution to the energy crisis will boost the economy, which will have a knock-on effect on the property market.”

Another point that was made at the State of the Nation Address that will have an impact on the property industry is the fact that foreign nationals will no longer be allowed to own land in South Africa, but will be eligible for long term lease. Although there was discussion around this position before yesterday’s speech, it was expected that foreigners would only be restricted to some degree when purchasing land.  The bill has been tabled for later this year. The purpose of the bill will be to stop reliance on the willing buyer-willing seller method in respect of land acquisition by the state.

“While we recognise the fact that a bill will be implemented later this year limiting foreign land ownership, which is a concern to the real estate industry, the more concerning issue is the lack of stability displayed at the State of the Nation Address, which in turn could impact on foreign capital investment into the country,” says Goslett. “This in itself could lead to a lack of infrastructure development as well as a lack of employment opportunities for South Africans. We trust that the leadership of the country will make the right decisions that are in the best interest of its people,” he concludes.

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