The National Property Practitioners Council (NPPC) says it is disheartened by President Cyril Ramaphosa’s recent State of the Nation Address (SONA). In particular, the council is concerned about the lack of clarity on and commitment to key initiatives required to drive economic growth and wealth creation.
The NPPC is South Africa’s largest property sector trade association, representing over 40 000 registered property practitioners in residential and commercial real estate. The council’s mandate is to formulate, develop and implement credible industry-wide strategies capable of addressing national key imperatives and industry objectives. These include: industry regulation, transformation and education priorities.
Vuyiswa Ramokgopa - NPPC Chairperson
“The progress reported in the SONA and some of the proposed interventions – notably the approach to the energy crisis - clearly demonstrate that government has run out of ideas,” says NPPC chairperson Vuyiswa Ramokgopa. “It appears that government is most probably incapable of solving our most pressing problems in the short to medium term.”
She says the rising cost of living continues to put pressure on households, which is compounded by rising interest rates and unemployment - most importantly, an unacceptable level of youth unemployment, which places a further burden on households.
“The housing market and the property industry in general functions as a barometer for the general health of an economy, and it is evident from the president’s SONA speech that recovery is still a long way off.”
Concerns
From the perspective of the property industry, Ramokgopa says the SONA raised several issues that are of particular concern.
These include:
The delayed issuing of title deeds.
Step-up the acceleration of the delivery of affordable housing
The poor state of municipal management.
The energy crisis.
“These are damaging roadblocks, hindering the economic performance of the property sector and the growth of the economy as a whole,” says Ramokgopa.
Housing
According to the Centre for Affordable Housing in Africa, there is a massive housing backlog, with an estimated 2.5 million families needing accommodation.
Concerning issuing title deeds, the president stated that the current backlog in processing title deeds is over one million houses. This amounts to an estimated R242 billion in assets that should be in the hands of South Africa’s poorest households.
“A title deed is far more than a legal document,” says Ramokgopa. “It is the key to enabling households to create wealth and to participate in a variety of economic activities such as financing their children’s education and consolidating debt.
“The fact that some RDP housing recipients have been waiting for decades to receive their title deeds is one of the greatest tragedies of our democratic dispensation. To date, the only recent action we have seen from government is an announcement in October 2022 stating that human settlements will form a part of the government-wide approach of Operation Vulindlela on title deeds in partnership and collaboration with provinces and municipalities. This is to assist the property sector as a whole in all three spheres and to ensure that South Africans become the rightful owners of their own homes. But, unfortunately, no further information has yet been provided.”
Progress
The NPPC was pleased to note the progress made in releasing 14 000 hectares of state land for housing development.
“We believe this is an important step in responding to the ever-increasing demand for well-located, urban serviced land for housing and economic development purposes,” says Ramokgopa.
“However, the demand for housing far outstrips the current supply. Until the issue of land redistribution is addressed, illegal occupation of land and the hijacking of buildings will continue.
"We, therefore, call on government to expedite this process and partner with the private sector to ensure the rapid delivery of housing and infrastructure,” she says.
Social housing
A key trend that has emerged in rental housing is the growth and recognition of the informal rental market. In 2016 this market consisted of 919 000 households, but this number is estimated to have increased exponentially since then.
Late in 2022, the Department of Human Settlements gazetted a comprehensive document updating the norms and standards for all rental housing in South Africa.
“Government is committed to the eradication of informal settlements and the provision of fully subsidised, stand-alone houses for low-income households. However, government cannot afford to do this alone. Meeting this demand will require the government to build close to two million houses at a current cost of R343 billion,” says a department spokesperson.
According to the department, this is why government is now shifting its policy emphasis towards informal settlement upgrading, site and service schemes, affordable housing for ownership, social housing and affordable rental, including shared one-room units with shared ablutions and smaller units.
Ramokgopa says this policy shift is critical in supporting this vital section of the market.
“However, there needs to be more than good policy. The test will be in the execution of the programme, and government is known for lagging in this area. A good barometer of how serious government is about housing would have been to see what sort of attention this issue received in the SONA. Unfortunately, there was no mention at all.”
Housing bank
South African Finance Minister Enoch Godongwana recently announced that government is considering launching a housing bank to provide loans to public sector employees and close the gap in the housing market.
Ramokgopa says: “The NPPC welcomes this announcement and sees the development of a housing bank as a very positive step. However, a decade has passed since the department first announced the formation of this bank - formerly known as the Human Settlements Development Bank.
“More recently, President Ramaphosa announced during the 2021 SONA that the bank would be established that year. There have been no further developments in this regard, and this year there was not even a mention of this initiative. This raises further questions as to the commitment of government to delivering on this promise.”
Energy
During the SONA, the president repeatedly mentioned a scheme to encourage homeowners to switch to solar panels. However, no other details have yet been furnished.
Ramokgopa says that although the NPPC applauds the move for homeowners to switch to solar panels, it raises the following questions:
- What sort of incentives will be offered to homeowners?
- What sort of fee would homeowners who go completely off the grid be required to pay to Eskom?
These are questions the NPPC hopes to get more clarity on in the near future, says Ramokgopa.
Municipal governance
An issue closely linked to energy generation is that of municipal governance.
“The fact that 163 out of 257 municipalities are dysfunctional or in distress is an indictment of the leadership of those municipalities. It is an admission of a complete failure of governance which can not be taken lightly,” says Ramokgopa.
"The functioning of municipalities directly impacts investment and property values. As businesses migrate out of poorly managed municipalities, it exacerbates unemployment in those areas. This drives more people into already overcrowded urban centres placing additional strain on infrastructure.
“Although progress has been made in some areas, it has been only incremental and not enough to make a real difference to the state of crisis in the country. What South Africans need is not a message of hope. We need a detailed action plan backed by competent leaders who are capable of delivering that plan.
“SONA 2023 appears to be yet another address filled with positive - yet ultimately vague - promises of improvement. It remains to be seen if any concrete deliverables will be communicated in the coming months.”
Writer : Sarah-Jane Meyer