– Above: Berry Everitt, CEO of Chas Everitt International Property Group.
Following the supplementary budget tabled by finance minister Tito Mboweni last week, there are indications that interest rates will be lowered again next month or in September, to stimulate household and business spending and boost economic activity.
“This will be positive for homebuyers and property investors, because it will make it even easier to qualify for home loans. Home prices are also declining as expected, so the market over the next few months will present the best purchase opportunities seen in more than a decade,” says Berry Everitt, CEO of Chas Everitt International.
“What is more, while unemployment is rampant due to the many business closures brought about by the Covid-19 lockdown, there are certain sectors that are doing well and where employment prospects are good, such as food handling, transport, logistics and all the essential services. Consequently, we expect home sales to increase, and to generate a positive spinoff for the economy by the end of this financial year.”
Meanwhile, he says, the minister’s decision to move the country towards zero-based budgeting is to be welcomed.
“This suggests a real determination to cut government expenditure and scrap non-essential projects, while focusing our much-reduced resources on building up our infrastructure and creating millions of new jobs so that we can increase our tax revenue and steadily reduce our national debt, while still supporting better education, health and security for everyone.”
Gerhard Kotze, Managing Director of the RealNet Estate agency group.
“We are also in support of immediate reallocation of funds to local authorities to provide better services and thus upgrade the living conditions of many residents, and the commitment to more sustainable energy options.”
“However, we would have liked to see more direct support for existing property owners at this time, perhaps in the form of a tax reduction that would help those who are struggling to hang on to their homes, or could be used by landlords to offset some of the rent that many have lost due to the lockdown.”
Gerhard Kotze, Managing Director of the RealNet estate agency group, says that from a real estate point of view, there were four main positives in the supplementary budget, all of them related to saving jobs and creating new employment. This is the biggest challenge the country faces in trying to repair the economic damage done by the Covid-19 pandemic, and obviously vital for both the rental and purchase sectors of the real estate market.
He says the first positive was the news that the loan guarantee scheme for small businesses is now up and running and has already advanced some R10 million to help companies that lost money during the lockdown or that need help to restart. Every enterprise that can be saved also means jobs that are being preserved.
“The second positive is the R100 billion allocation over the medium-term for specific programmes to promote new employment – which is critical with the unemployment rate having reached 30,1% at the end of March, being set to increase even more over the next few months. These programmes include a revamped public employment programme and the presidential youth employment intervention. A total of R27,7 billion has been found to support these initiatives in the current financial year.”
Thirdly, says Kotze, it is welcome news that government is determined now to shift public sector spending away from consumption and into investment – and specifically R100 billion of investment in better infrastructure, including roads, railways, harbours and sustainable energy. Such projects are usually also major job creators.
“And finally we are encouraged by the decision to recapitalize the Land Bank. The R3 billion involved is a relatively small expense for the fiscus, but will save many farmers from going under – and in the process ensure continued food security for SA while saving many thousands of agricultural jobs.”