Property Report: The budget speech- where does real estate stand?

The budget speech has come and gone and although there were no major surprises, from a real estate perspective, some themes emerged which should encourage people as our government attempts to chart a course for calmer seas.

It was pleasing to hear our finance minister, Tito Mboweni talk about the government being in favour of private property ownership.

To some degree, this should ease concerns over the hotly debated constitutional changes regarding expropriation without compensation.

This sentiment was seemingly backed up by the allocation of R3.7 billion over the coming three years to help emerging farmers looking to purchase land. Furthermore, the new Help-to-Buy pilot subsidy for first time home buyers amounting to R950 million is another good indication of the government’s intentions in the sector.

Land and home ownership is a hot topic and something that needs to be addressed going forward or we will see growing disenfranchisement and even more illegal ‘land grabs’ as we have recently experienced at Sheffield Beach.

Fortunately, government has also pledged R14.7 billion for two new grants to assist in upgrading basic services in informal settlements.

The improvement of basic living conditions is imperative and long overdue. Time will of course tell whether the money is well spent, but it is a step in the right direction. In a response to rapid urbanisation, Mboweni also made mention of a shift from ‘horizontal’ development to ‘vertical’, as part of an integrated development plan.

If one reads into this, it suggests that government incentives may encourage a shift towards the construction of more sectional title blocks which has been a trend in many of the country’s major metros.

Of course our economic salvation and the success of many real estate and infrastructural projects both nationally and closer to home is heavily reliant on our ability to ‘keep the lights on’, a lovely euphemism we tend to hear bandied about.

With Eskom being given a lot of air time at the moment, and a key factor weighing on the minds of many local and international investors and ratings agencies, Mboweni dealt with the R400 billion Eskom debt and the power utilities deteriorating capacity to play its part in our economic recovery.

Mboweni assured investors and taxpayers that the government would not take Eskom’s debt onto its books as many had feared. While the risk of a sovereign downgrade still remains, the government is planning a R69 billion cash injection in the company over the next three years, under strict conditions.

It is easy to feel despondent or get caught up in a negative news cycle, but I am quietly optimistic that we are headed in the right direction.

Ultimately we all have to live and work somewhere and regardless of the macroeconomic challenges, the property market will continue in a fairly predictable and cyclical nature.

As I always like to reinforce, we live in one of the most sought after and exciting regions in the country and can look forward to steady and continued growth over the medium and long term.