Market awaits higher growth, employment

There’s good news and bad news for the real estate industry on the employment front this month, says Berry Everitt, MD of the Chas Everitt International property group.
“On the positive side, the new International Business report from professional services group Grant Thornton suggests that SA workers will receive higher wage increases than those in most other countries this year.
“This report is based on interviews with 3450 CEOs at the end of last year, and states that about 68% of SA businesses will increase salaries in line with inflation this year, while some 26% plan to award above-inflation increases (compared to only 15% in the other BRICS countries).
“And from a real estate point of view, this means that those in employment this year will have an improved chance of being able to qualify for a home loan and afford their own home.”
Also encouraging, he says, is recent news from recruitment group Adcorp that income inequality between the races, and especially between blacks and whites, has declined sharply in the past decade, and could be eliminated entirely by 2020 at the current rate of progress, which sees the average white employee’s income rising by 5,3% a year while the average black employee’s income rises by 14,9% a year.
“On the negative side, however, employment numbers go up and down like a yo-yo from month to month, demonstrating the lack of sustainable progress being made in creating new jobs in SA and, by implication, an expanded residential property market.

Writing in the latest Property Signposts newsletter, Everitt notes that over the past six months, the net gain in jobs seems to have been only around 20 000, with probably half of those being in the informal sector.
“In addition, the latest statistics show that the number of formal employers continues to decline, having shown a drop of 2000 in the last quarter of 2012, and standing now  at10% fewer than at the start of the global financial crisis.”
It is thus not surprising, he says, that Absa’s latest SME Index shows an increase in the number of people who are self-employed - to some 1,25m, or 10% of all the working adults in the country.
“But while the entrepreneurial spirit shown by these people, often in the face of retrenchment or company closure, is to be admired, we all know that it is notoriously difficult for self-employed people to obtain home loans, so most of them are effectively out of the property market for now.”
Consequently, he says, although both housing demand and property prices have been rising steadily for the past few months, the economic growth rate is going to have to rise and send employment numbers up before the next real property ‘boom’ can realistically be expected.

  Comment on this Article

  Please login to post comments

Post to my facebook wall
Characters remaining

    Latest Property News
    • 22 Jun 2018
      The rental market in many Johannesburg suburbs has shown encouraging signs of revival this year but it remains a competitive market and landlords who best cater to their market’s needs will reap the healthiest returns.
    • 22 Jun 2018
      Home design is constantly evolving to reflect the changing needs of society. We look at some of the ways in which our use of space is changing.
    • 22 Jun 2018
      While estate agents can help the seller with correctly pricing the property and marketing a property to the right pool of potential buyers, at the end of the day it’s the impression that the property will make on buyers that counts the most.
    • 21 Jun 2018
      Anyone who’s ever been involved in a building project that’s gone wrong will appreciate the importance of adequate insurance cover in the construction industry.
    • 21 Jun 2018
      A recent news story about a blind tenant caught in a legal battle with his body corporate over letters and notices he was unable to read and consequently comply with has raised the question: what are the legal obligations for landlords with disabled tenants?
    • 21 Jun 2018
      A trend that’s taken the world by storm in recent years is that of hygge (pronounced: hue-guh), a Danish concept that is about creating intimacy, connecting with loved ones and taking pleasure in small, ordinary things.
    • 20 Jun 2018
      Buying or selling real estate isn’t as easy as it is portrayed sometimes, especially if there is a death of a party during the transaction which can make it awkward, tricky and inconvenient.
    • 20 Jun 2018
      With interest rates remaining at historic lows and banks continuing to compete for mortgage finance business, first-time buyers with funds at their disposal are currently well-placed to gain that initial foothold on the property ladder, particularly in the light of the slightly lower growth rates currently experienced in residential property values.
    Subscribe to the MyProperty Newsletter

    Last Name  
    Email Address  
    Email Frequency
    Share this Page

    For Sale Property
    Rental Property
    More Options
    Connect with us