Crime situation still a cause for concern says Rawson MD

South African property owners have over the past 20 months weathered several major storms with commendable success – but one factor, crime, is still a cause of concern and a serious dampener on the property market, says Tony Clarke, MD of Rawson Properties.

“Those who own property in SA,” said Clarke, “should have been impressed by the way confidence has returned to the property sector – but this confidence would have been at a far higher level if only we had not had a serious crime problem.”

The property market, he said, had successfully come through a number of major crises: the Zimbabwean crisis, the Eskom power cuts, the global financial meltdown, the National Credit Act (which more than any other factor slowed down house sales), the banks’ inability to give mortgage bonds as previously, the Polokwane Congress and the establishment of the Zuma regime (with a new but largely unspecified agenda). Then, too, there had been the new, radical insistence on time-consuming training for agents to bring them up to professional levels – a wise but, in Clarke’s words, an “expensive” move.

“All this,” said Clarke, “came on top of the huge debt problem that South African homeowners and consumers got themselves into which in the housing sector has led to ongoing repossessions of many thousands of houses, the effect of which will be to keep prices down for the foreseeable future.”

All these challenges, said Clarke, have been, or are being, lived through without killing off the property sector – and the fact the South Africa has managed this bears witness to the resilience of the property market and the ongoing perception that property is still the safest of investments.

“If, now, South Africans start achieving an improved crime record, the stage will be set for a full-scale revival driven by pent-up demand for homes, which increases month by month.”

Clarke said that only those close to the residential property scene realise just how strong the need for houses has become.

“Right now,” he said, “South Africa has the fastest growing middle class in the world, a fact confirmed by several reports, and the majority of these newly empowered people want to upgrade their living standards and become homeowners.

“That is the first reason for faith in residential property. The second is that our basic fiscal strategies, policies and bank reserves are satisfactory. South African banks did not, like so many of their First World colleagues, fall apart recently in the global recession.

“Then, too, we have shown an impressive ability to host international events on the sporting, conference and tourist front and this, it seems, has had a good public relations effect worldwide.

“Add to these factors, the boost that the 2010 World Cup is already starting to give to our economy and the increased exposure worldwide that South Africa will enjoy as a result of it, and we have yet another reason for confidence.

“The challenge now, therefore, is to get on top of our fast increasing crime problem.”

In certain areas, said Clarke, crime is now the number one reason for emigration – or at least for keeping the possibility of emigration alive in people’s minds. This, he said, had been confirmed in FNB’s latest report which indicates that crime is now responsible for some 45% of all emigration. It has also, he said, been responsible for a new trend, seen throughout South Africa – “semi-gration”. This he defines as a tendency to move to areas in South Africa where life is thought to be safer.

“Fourteen percent of high net worth individuals are reported to have moved elsewhere in SA primarily for safety reasons,” said Clarke. “The major beneficiaries of this have been the coastal areas of the Southern Cape – George, Knysna, Plettenberg Bay and Mossel Bay in particular, and the northern and southern coastal towns of KwaZulu Natal.”

In the circumstances, said Clarke, the new Commissioner of Police’s initiatives aimed at reducing crime are very welcome.

“If these initiatives show even moderate success, this could be the start of a new era, one in which reduced crime helps the property recovery.

“In my view, the signs are already there that the market has bottomed out and will grow steadily, with “normality” in prices and trading conditions evident by mid-2010. If the crime situation can be controlled the revival will be even more spectacular than even those of us who have always been optimistic have previously predicted.”

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