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IOL News
04-07-2025
- Business
- IOL News
How ageing infrastructure is impacting the local property market in South Africa
Municipalities are faced with the challenge of dealing with the legacies of the past regarding infrastructure development. Image: Se-Anne Rall The local property sector is facing challenges due to ageing public infrastructure, which suffers from limited maintenance and facilities management. This comes as South Africa marks the end of the first year since the seventh Administration took office, following the National and Provincial Government Elections that took place on 29 May last year. Additionally, there are ongoing delays in government payments to service providers, Nolubabalo Tsolo, the executive director at the Association of South African Quantity Surveyors (ASAQS), told "Independent Media Property". She said a key issue is the lack of transparency regarding national government properties. 'The government continues to occupy leased buildings while simultaneously leasing out its properties. To address these issues, the government needs to focus on improving its asset management systems. "This will ensure that public property assets meet both social and economic objectives, ultimately helping to identify the value they provide,' Tsolo said. The organisation which represents the quantity surveying profession at government, industry and any other forum said that with the 7th Administration, one year into the current term of office, the Minister of Public Works and Infrastructure (DPWI,) Dean Macphearson, has reported that state-owned buildings have been hijacked nationwide. ASAQS said the minister has committed to conducting a comprehensive audit of all government-owned properties. 'Additionally, the minister stated that these buildings will be rehabilitated and used for housing. This is a positive step toward addressing the housing challenge that we face in South Africa.' Addressing the Budget Vote on Wednesday, Human Settlements Minister Thembi Simelane highlighted illegal property occupation as a significant impediment to South Africa's development objectives. She said that during the current financial year, they will develop a Policy Framework for the Prevention of Illegal Eviction from an Unlawful Occupation of Land Act (PIE) to give effect to the latter's amendments. 'We will also embark on countrywide stakeholder consultations and engagement sessions with various sector partners in the human settlements value chain on the Prevention of Illegal Eviction from an Unlawful Occupation of Land Act (PIE) draft policy,' Simelane said. The housing backlog stands at over 2.4 million households in need of adequate housing in South Africa as per the National Housing Register. In the five years between 2024-2029, Simelane said working with all their strategic partners, they have undertaken to deliver 237 000 Breaking New Ground (BNG) units, 314 000 serviced stands, 140 000 subsidies disbursed through various housing interventions to the missing middle, upgrading 4 075 informal settlements, 15 000 social housing units, register and handover 80 000 title deeds and improve the management of available rental stock by achieving a 95% tenanting rate and a 90% collection rate in social rental stock. ASAQS said that challenges that are continuing to affect the South African property sector are the procurement processes, citing that there should be transparency on the procurement policies, and the country needs to be aware of the companies that are constantly appointed. It said the delay in the payment of service providers continues to be an obstacle to the progression of the economy of the country as this leads to companies closing and some employees' salaries being delayed. Tsolo said the DHS should aim to achieve a property management system that integrates with the asset management system and procurement system, thereby ensuring transparency to alleviate corruption. In the Budget Vote speech, Simelane said that a few years ago, the Department developed the Housing Subsidy System (HSS), a portal that is supposed to serve as a housing needs register data bank and information system. However, she said it is a legacy system which is not compatible with the latest technologies and lacks the critical component of citizen engagement. 'Working with the State Information Technology Agency (SITA), we are in the process of developing the National Digital Human Settlements Management System, which will modernise the way we manage human settlements data and improve coordination across departments. "This initiative will address current inefficiencies by providing a centralised platform for better resource management and service delivery,' Simelane said. She added that this system aims to improve efficiency, transparency, and accountability in the management of construction projects, ensuring the timely completion of projects and accurate allocation of resources. 'The integrated software solution aims to streamline and automate various processes related to managing human settlements. It will help government housing authorities, urban planners, and city administrators to efficiently manage housing, land, infrastructure development, housing beneficiary lists and related aspects of human settlements. "The development of a comprehensive, integrated online National Digital Human Settlements Management System (NDHS MS) will further enable citizens to apply online for a housing product and be informed about the outcome of their applications,' said Simelane.
IOL News
26-06-2025
- Business
- IOL News
Bridging the gap: essential insights on property ownership for young black South Africans
Many black citizens have been denied the opportunity to fully understand the benefits and pathways to property ownership. 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.'
IOL News
18-06-2025
- Business
- IOL News
Why young South Africans struggle to understand property investment
Many young people in South Africa are excluded from traditional lending due to low or irregular incomes, lack of credit history, or student debt. Image: File: African News Agency (ANA) Many young people do not understand the mechanics of buying or investing in property, or how to plan financially for long-term ownership. Asked by Independent Media Property what could be done to put the country's young people in better stead,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". He 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.' Video Player is loading. 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Next Stay Close ✕ Last week, Siviwe Gwarube, the Minister of Basic Education delivered the keynote address at the Inaugural Policy Dialogue on Entrepreneurship Education. The event was hosted in partnership with the European Union's Education for Employability Sector Budget Support Programme. It aims to address South Africa's youth unemployment crisis through an education that empowers learners to be job seekers and job creators. In her address, Gwarube reflected on the growing urgency to equip South African learners not only with academic knowledge, but with the skills, mindset, and agency required to navigate a fast-changing and uncertain world. She will speak to the Department's broader Three-Streams Curriculum Model, the development of a national entrepreneurship education policy, and the strategic imperative to address South Africa's high youth unemployment through inclusive, innovative education pathways. This high-level dialogue aimed to ignite a cross-sector conversation on embedding entrepreneurship education into the basic education system. According to the recent Lightstone data, the youth accounted for roughly 25% of total home applications in South Africa during the first half of 2025. This was a slight decline from the previous years which is attributable to economic pressures and strict lending criteria. Machike 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. Meanwhile, during the important period of heightened focus on the youth and youthfulness, and particularly as the growing trend of excessive spending, online gambling, and impulsive borrowing threatens to damage the financial futures of South Africa's youth, the National Credit Regulator (NCR) urged young consumers to exercise caution and financial responsibility. With the increasing popularity of the 'soft life' culture, epitomised by a lifestyle of luxury, designer brands, and instant gratification, many young people find themselves living beyond their means, said Lynette de Beer, Interim Chief Executive Officer at the NCR. She further added that this lifestyle, often glamourised on social media, is pushing South African youth into taking on unnecessary debt to keep up appearances or fund risky behaviours like gambling, sport betting and even forex. De Beer said impulsive debt almost always ends in long-term financial regret. She said what may seem like small loans or quick online bets can quickly spiral into a bad credit profile, reduce employment opportunities but also limit future credit access. For instance, securing a job that requires vehicle ownership becomes impossible with a bad credit score, she emphasised.
IOL News
13-06-2025
- Business
- IOL News
How lower interest rates could boost house prices in South Africa
The depressed state of new residential building plans passed in most of the country's larger municipalities is likely to lead to a meaningful recovery of house prices as soon as demand recovers on the back of lower interest rates. Responding to an Independent Media Property enquiry, economist Dr Roelof Botha said although the residential property sector has welcomed the latest rate cut, the prime overdraft rate needs to be reduced by at least another 125 basis points for a sustained recovery. 'Hopefully, the Monetary Policy Committee (MPC) will become more aware of South Africa's most pressing economic policy objective, namely, to stimulate growth and employment creation,' Botha said. He said that in order to shed some light on what may be expected at the July MPC meeting, it is useful to reflect on the sterling performance of the rand. 'In its regular monetary policy statements, the MPC invariably addresses the issue of currency weakness, which leads to higher rand-denominated imports and adds to inflationary pressures - both directly and indirectly via the higher cost of intermediary inputs in manufacturing and other industries.' Botha said the news on this front is exceptionally good. With both the nominal and real exchange rates of the rand exhibiting strength, he said it is clear that domestic inflation is not being threatened by currency weakness, which should lead to further interest rate cuts in 2025. Botha said that between the end of 2019 and the first quarter of 2022, average home prices were rising at a marginally higher rate than building costs. He said parity in the annualised rate of change in the construction input price index (CIPI) and the BetterBond home price index was achieved in the second quarter of 2022, due to the negative effect of record high interest rates on the residential property market. 'Since then, the trend has been reversed, with both the CIPI and the BetterBond home price index increasing at lower rates than the consumer price index (CPI). At the end of the first quarter of 2025, the YOY increase in house prices was marginally negative, with the CIPI increasing by merely 1.5%, which is negative in real terms.'
IOL News
20-05-2025
- Business
- IOL News
Small increases in defaults: what it means for property repayments and mortgages
For the Human Settlements Sector to achieve its housing delivery mandate, there is a need for all relevant stakeholders to integrate their infrastructure plans leveraging the Intergovernmental Relations (IGR). Image: Simphiwe Mbokazi Data from the credit bureau shows that defaults, however small, have increased in property repayments and mortgages in recent years. Benay Sager, Chairperson of the National Debt Counsellors' Association, told Independent Media Property that while it was still a very small increase, it has risen compared to a few years ago, driven largely by the pressure that homeowners are under. 'The movements are driven mainly by changes in the interest rates, and if you look at interest rates five years ago, they were very low in the midst of Covid. "This created a bit of an artificial boom, and since then, the property sector has really slowed down in terms of new purchases. Similarly, in terms of servicing debt in the property sector, things have become a little bit harder,' Sager said. He added that it is not so much debt levels but interest rates that really impact potential considerations when buying or investing in a property. The NDCA said interest rates really drive property ownership, and they were already seeing the slowdown here. It said that unless the interest rates drop significantly, which is unlikely to happen, they did not see this make-up changing much in terms of who can buy property and the other big dynamics happening there. 'Some parts of the country are becoming more unaffordable, like Cape Town, which probably means other parts that are more affordable will benefit.' Sager said that while the property sector is an open market, and that has to be seen playing itself out, rates are a big consideration from a government perspective. 'Rates have been continuing to increase above inflation over the last several years, so perhaps that should be curbed, as we see a significant portion of consumers' expenses going towards paying rates and electricity and other regulated factors. "If these increases can be curbed, and the entities that provide these services can become more efficient, it will definitely benefit consumers,' Sager said. Commenting on the release of the DebtBusters' Q1 2025, Sager said over the past nine years, electricity tariffs have increased by 135%, the price of petrol has risen by 88%, and the compound effect of inflation is 52%. He said as a result, consumers who applied for debt counselling in Q1 2025, on average, needed 69% of their take-home pay to service debt. This was a significant increase compared to previous quarters and the highest since 2017. The most vulnerable consumers, taking home R5 000 or less per month, use 76% of their income to repay debt. Those earning R35 000 or more spend 77% servicing debt. The ratios for these income groups are the highest since DebtBusters started analysing the data in 2016. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. 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Advertisement Next Stay Close ✕ Speaking at the DEVAC Infrastructure Summit last week, Thembi Simelane, Minister of the Department of Human Settlement (DHS), indicated that the they were advancing legislative amendments to ensure fair access to home loans and eliminate discriminatory lending patterns, prevent illegal land invasions and fast-track formal township development and develop the Human Settlements Bill to reinforce a spatially just housing delivery system. Simelane said to improve efficiency across the sector, the department is currently expediting the process of developing the Digital Human Settlements 11 Management System (DHSMS), as part of the broader digital transformation strategy of the government, thereby addressing issues of inefficient beneficiary management and unreliable project data. The DHS minister also said that through their various funding sources and key deliverables, the human settlements sector was able to gazette 50 catalytic projects that are to yield 696 280 housing opportunities of mixed typologies such as RDP Walk-Ups, Free Standing BNGs, Social Housing Units, Affordable Rental Stock, Community Residential Units (CRUs) and Serviced Sites. She said typical examples of these projects include projects like Lufhereng in City of Johannesburg, Vista Park in Mangaung, Greater Cornubia in eThekwini, Matlosana N12 in North West and the N2 Gateway in the City of Cape Town. With these projects, the human settlements sector said it aims to accelerate the implementation of the spatial transformation of cities that is aligned with the Spatial Land Use Management Act 16 of 2013, whilst considering that there are limited land parcels that are located closer to work opportunities. Independent Media Property
