Bridging the gap: essential insights on property ownership for young black South Africans
The reality is that many segments of South African society have been historically disadvantaged when it comes to access to property ownership and understanding how it can be used to build generational wealth, says Stefan Botha, the Director at Rainmaker Marketing, in response to an enquiry from "Independent Media Property".
Many younger black South Africans were unable to learn about property ownership from their parents, as it had not been a legal or practical option for previous generations.
As an example, he said black South Africans were officially allowed to own property throughout the country in 1991 with the repeal of the Land Act and the Group Areas Act. He said that consequently, property ownership was rarely, if ever, discussed around the dining room table.
'This remains a significant issue in South Africa. Many citizens have been denied the opportunity to fully understand the benefits and pathways to property ownership, and we must work to change that.
"One major consequence of this history is a widespread lack of understanding about good versus bad debt. As a result, many South Africans are heavily burdened by debt and have little disposable income, often due to acquiring short-term debt for cars and luxury goods.
"This puts both individuals and the broader economy at a disadvantage,' Botha said.
Last week, "Independent Media Property" reported that many young people do not understand the mechanics of buying or investing in property or how to plan financially for long-term ownership.
Tsekiso Machike, spokesperson to the Minister of Human Settlements (DHS) Thembi Simelane, said the country must enhance financial literacy and property education, "therefore, incorporate property and financial literacy into high school and tertiary curricula".
Machike said the country must also encourage entrepreneurship in real estate.
'Youth entrepreneurs in real estate are underrepresented but can unlock job creation and innovation in the sector.'
The department said youth representation in South Africa's homeownership and property sectors is currently limited, adding that there is a noticeable shift towards investment-focused property purchases.
'Economic challenges remain a significant hurdle, but initiatives and advocacy efforts are emerging to support and empower young individuals in these sectors.'
The ministry, which facilitates the creation of sustainable human settlements and improved quality of household life, said there is also a need to improve access to financing; promote First Home Finance to be more accessible, better publicised and easier to navigate for the youth, since many youths are excluded from traditional lending due to low or irregular incomes, lack of credit history or student debt.
The property and lifestyle marketing agency said that a key aspect of this problem is that people often over-extend themselves financially by taking on the wrong kinds of debt, which leads to poor credit records. It said this creates a vicious cycle, making it even harder for individuals to enter the property market. There is also a critical need for greater education around improving and rebuilding credit scores and financial histories. This kind of knowledge is essential to helping more South Africans qualify for property financing in the future, it added.
Botha, an experienced property expert, said he believes the responsibility lies with both the private sector and the public sector in working together to drive meaningful change in the local property and economic sector.
He said from a private sector perspective, education around property ownership is absolutely critical.
'It starts with helping people understand the basics of property ownership - how debt can be acquired, how it works and how it can be used as a tool to build long-term wealth through property.'
He said that from a public sector perspective, there needs to be a more unified and coordinated approach to promoting property ownership across South Africa.
'In my view, the government can play a much greater role in supporting and funding initiatives that provide property education and access, ensuring these efforts are rolled out nationally and reach all market segments.'
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