How SA would benefit from a focus on home ownership

A decade ago, a survey by the Reader's Digest magazine showed that 65% of South African consumers were in favour of home ownership, and the latest statistics show that nothing much has changed since then - except the size of the population.

So says Rudi Botha, CEO of BetterBond*, SA's leading bond originator, who notes: "The latest homeowner sentiment survey conducted by Absa shows that a comparable 67% of SA consumers are currently positive about the benefits of owning a home rather than renting one. But the population of SA has increased from 49,5m to 56,5m over the past 10 years, so the actual number of people in favour of home ownership is now considerably higher than it was then.

"Meanwhile the most recent General Household Survey (GHS) report released by StatsSA shows that only about 53,5% of SA households actually live in their own homes (Including those who live in traditional rural homes). Another 8,8% of households are partial owners, while 24,7% are tenants in formal homes and 13% live in informal structures."

There is thus a huge opportunity, he says, for everyone involved in the country's real estate industry, including agents, banks, developers and originators as well as the Dept of Human Settlements and municipalities, to close the gap between those who own a home and those who would like to own one.

"Given that there are currently around 16,2m households in SA, these stats show that there are currently at least 2m of them that would like to own a home but don't yet. And enabling them to do so has the potential not only to add trillions of rand directly to the fiscus, but also to create literally millions of jobs - and a stream of ongoing revenue."

Calculations by the US National Association of Home Builders (NAHB) show that for every apartment built, at least one permanent job is created either in construction or in "support" sectors such as building and housing product manufacturing, transport, and professional services like banking, architecture and real estate.

"And every single-family home that is built yields almost three permanent jobs, so addressing this home ownership gap could go a very long way towards solving our unemployment problem - and boost VAT and income-tax collections."

What is more, Botha says, a higher rates of home ownership could generate an enormous amount of badly-needed revenue for local authorities and local economies. "The NAHB figures show that single-family homes generate the equivalent of around R500 000 just in local property taxes, while apartments add around R200 000 each to municipal incomes. In addition, homeowners tend to spend their disposable incomes close to home, and this supports local businesses and service providers.

"Consequently, we would like to see a focus in the coming year on getting the housing subsidies that have been provided for in the national budget actually into the hands of potential home owners - thousands of whom will then be able to access home loans and afford to purchase their first properties, especially if they apply through a reputable originator like BetterBond."

*BetterBond currently accounts for more than 25% of all new mortgage bonds registered in the Deeds Office annually and its statistics are a reliable indicator of the state of South Africa's residential property market.