Home / Spotlight  / How did SA’s housing market grow by R1tn after a recession?

How did SA’s housing market grow by R1tn after a recession?

recession recovery resize

The State of Transformation Report for the South African Property Sector published by the Property Sector Charter Council (PSCC) shows that the South African residential property market has increased by nearly R1tn over six years, from the 2010/11 to 2016/17 financial year.

The residential property market stood at R3tn in 2010, but grew to a staggering R3,9tn by 2016. This feat begs the question: How is such rapid growth possible so soon after a global economic recession in 2008/09; and one that hit the property market the hardest?

Changing fortunesEntrepreneur break out resize

The answer is “Black Magic”. For a long time the biggest racial group in the South African population was largely excluded from meaningful economic participation due to the social constraints dictated by the apartheid regime. This meant that the national fiscus did not perform at the level that it potentially could have. To paint the picture a little clearer, 80.8% of the population is black. So at the dawn of democracy in 1994, 80% of the people in the country began to have access to a level of education and economic participation that they were not previously meaningfully part of. The fate of the black child no longer lay within the limitations of being a kitchen girl, garden boy or soot-clad mine worker. Opportunities were now limitless.

What does all this have to do with the sudden acceleration of growth in the property market as of 2010? The black child, with newfound access to quality education who began school in 1994 finished primary school in 2000, high school in 2005, and earned her diploma by 2008 or her degree by 2009 now became employable in well-paying professions. She, and hundreds of thousands just like her in that year alone (millions just like her over subsequent years to date), now had access to home loans through their newfound good credit and started buying property. Considering the above information presented, it is no surprise then that there is a consistent increase in the amount of black people buying property and thus positively contributing to the GDP.

Ooba, a home finance company, recently conducted extensive research that showed racial trends in property purchases in South Africa. The data depicted that in 2017, 45% of home loan applicants were black and 41% were white. However, of the approved loans, 39% of them were from black applicants, while 47% came from whites. This shows continued growth since those figures stood at 30% for black people and 56% for white people in 2016.


Now you can sell your home privately and save on agents’ commission


The data that is most relevant here is that which refers to first-time home buyers. Considering that 49% of home loans in 2017 were for first-time buyers, the data is worth inspecting in depth. Some 59% of first-time home loan applicants were black people and 27% were white people (55% of the approved loans were for black people, versus 31% for white people).

The economy will thrive most when each demographic in South Africa is pulling its proportional weight. It is going to take some time to adequately address and redress the socioeconomic injustices of the nation’s recent past, however we are taking R1tn strides in the right direction.


Written by Tshepo Machethe

bty

Tshepo Machethe is a 24-year old business communication practitioner by profession, and a serial entrepreneur by passion. Over the years he has started several companies that form the Statik Corp Group. He is the founder of Contabode, one of the first premium container housing companies in South Africa. Tshepo is an avid reader, passionate writer and, above all, a chess addict.

 

Trusted Tenant - #TenantPower

hometimes@pixelbaste.com

Review overview
NO COMMENTS

POST A COMMENT