Tony Clarke, Managing Director of the Rawson Property Group, says those who criticise South Africans for being lax about saving and too inclined to “want it all and want it now” often gloss over the very real financial predicament in which many find themselves.
Tony Clarke, Managing Director of the Rawson Property Group, says those who criticise South Africans for being lax about saving and too inclined to “want it all and want it now” often gloss over the very real financial predicament in which, not only the poor and the previously disadvantaged, but also a great many middle-class South Africans today have found themselves since the 2008/2010 downturn.
Recapping on South Africa’s economic performance since the year 2000, Clarke says $1 (USD) had at that time cost R6.94, while today the exchange rate is over R13.00. The rand’s status vis à vis the euro and the pound is equally weak.
In the same period since 2000 annual Eskom charges have risen year-on-year from 5.5% to a peak of 25.8% in 2011, and now stands at close to 12%. Fuel costs in this time have also quadrupled, he says. In circumstances like this, Clarke says it is not altogether surprising that South African household debt is still equal to 70% plus GDP, and slightly more than half of South Africans applying for mortgage bonds are automatically disqualified by credit impairments.
Nevertheless, Clarke says the South African residential market has recently proved itself to be an alternative economy, of sorts, operating with a predominantly bullish outlook and with the ability to buck the trends and be resilient. This has made it an increasingly good investment and asset class.
“Looking at the economy right now, it is very difficult to predict a significant upturn within the next three or four years, but unless the scenario changes entirely, if and when it comes, property ownership will increase and everyone will benefit from that,” says Clarke.
“We can only hope that this comes about fairly soon rather than in the distant future.”