If you listened to your parents (though what did they ever know!), the first thing you truly needed to own in your lifetime was a house. Buy a home, and you’re set for life, they told us.
Well, that’s no longer true. Look around Joburg and you’ll see thousands of “For Sale” signs, many of which tell a tale of lost capital and thwarted expectations. This is somewhat different in Cape Town, of course, where if you’d owned even a parking space a decade ago, you’d be a multimillionaire – but it’s a complexion evident in most other parts of the country.
This speaks to the grim reality that the homeownership dream in South Africa has been, if not entirely broken, severely undermined. Buying a home, even to rent it out, is no longer a no-brainer – as Vernon Wessels’ incisive take on the issue today illustrates.
There are many factors behind this, of course. But if you’re looking for one group to blame, it is the kleptocrat-minded extraction force that would prefer to be known as our “municipal officials”.
Take the City of Joburg, for instance, where transparently clueless officials have blithely raised rates every single year to pay its power, water and sanitation departments, which have roundly failed to do their jobs. These rate hikes have been unjustifiable, given the parlous service delivered, and have acted as a major disincentive to buy property.
If you knew, for instance, that you’d be on the hook to pay municipal rates which are soaring at vastly more than inflation, this changes the economics of home ownership. And, of course, it doesn’t help that you’re being asked to pay these rates to subsidise a city workforce that, were it actually deceased, might do less damage. Paying to see a clown is great if you’re going to a circus, but not so much when these are the people who are meant to be running the city on which your future wealth depends.
Until South Africa has a proper exorcism of the deathly-useless municipalities which have only served to erode property values over the past decade, the value proposition of home ownership remains uncompelling.