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What democracy has done for real estate

In the 20 years since the transition to democracy, SA has seen remarkable and mostly positive changes in almost every aspect of life and business – and nowhere more so than in the property market.
 
So says Richard Gray, CEO of Harcourts Real Estate, who notes that although the Group Areas Act had been repealed well before the first democratic election in 1994, there had in fact been very movement from the “black” townships to the “white” suburbs.“And had it not been for the advent of a proper democracy, our residential market would most likely have stayed locked up in these racial silos, and showed very little expansion or value growth.
 
“Instead, though, we have seen large-scale economic empowerment and a huge addition to SA’s middle class of about 2,7m adults that has played no small role in stimulating the real estate market. Literally tens of thousands of people who were previously not allowed or financially able to enter the market have become homeowners in the formal sector in the past 20 years, and our suburbs are increasingly multiracial and multicultural.
 
“In addition, the democratic government has been able to transfer almost 400 000 homes in the former townships to their residents since 1994, thereby giving thousands of families an asset on which they could start to build wealth. This has also given rise to a healthy market sector which has allowed many first-time buyers to gain entry to the market and where, according to First National Bank, values showed an inflation beating year-on-year increase of 7,6% in the last quarter of 2013.”
 
Alongside this, he says, thousands of new homes have been added to SA’s housing stock and property prices have risen, on average, by some 23% in real terms since 2004 – despite the intervening recession.
 
StatsSA figures show that builders and developers in the private sector have reacted to the increase in demand for homes by building more than 500 000 new units in the past 20 years, and at the same time, the Department of Human Settlements – which inherited a critical housing shortage of more than 2m units in 1994 - has built more than 1,4m units and provided more than 5m poor people with secure housing.
 
The most recent Census (2011) showed that all this activity in the property market has increased the percentage of home ownership in SA from 66% of households to 77% - and it is worth noting, says Gray, that the residential building industry has also been one of the biggest contributors to skills and job creation in the past 20 years.
 
“Democracy has also made SA, including its housing sector, more attractive to foreign investors, which has stimulated the whole economy. And on top of this, individuals and companies who have invested in the new SA have added to the demand for housing in both the ownership and rental sectors.”
 
 
He says the likely alternative to this progress,had SA not taken the road to democracy in 1994, “was at the very least greater economic sanctions that would have crippled our economy and led to massive job losses, deep recession and incurable poverty.
 
“Consequently, we really have plenty to celebrate as we mark the 20th anniversary of democracy this week – and plenty to look forward to in the next 20 years.”


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