Dead deeds office can get things spinning
The house next door to us in our village is empty. So is the property next to that, the one actually on the river, and often in the river when the water rises. Together, I reckon they’re worth north of R10m.
They’re empty because they’ve been sold and the owners have left but the new owners haven’t arrived. And the new owners not arriving isn’t because the removals companies are still in lockdown, though they inexplicably are.
It’s because the transfers of these two properties, along with tens of thousands of others, have piled up in deeds offices around the country and have not been processed.
It takes three months to process the sale of a house, and Adrian Goslett, the regional CEO of Remax, one of the biggest estate agencies in the world, reckons that at any one time in a normal month there would be about R20bn worth of transactions in the system.
If he’s right, given the lockdown and that the real estate business is slated to come back on stream only in level 2, we could have about R100bn either tied up now and in potential over the next five months. That’s money, or potential money, in people’s pockets, where it should be.
“If you stop the real estate wheels from spinning, then a lot of other wheels stop spinning,” Goslett says.
“Real estate in isolation contributes about 5% of SA’s GDP and has approximately 42,000 people that work the residential real estate sector, [but] banks, originators, conveyancers and many more feed off real estate. Without us, their industry stands still. If they stand still, they will lay off people and further contribute to rising job losses.”
I say “potential” because what is in fact happening is that the lockdown of the deeds office, for little reason other than an inability to calculate consequence, is starving the country of liquidity.
A fuss is made of the Reserve Bank being ready to “inject” R200bn of liquidity into the economy as “stimulus”, but there’s a gigantic amount of liquidity just waiting to be unleashed if the minister responsible for the deeds offices around the country gets them up and running again.
I think that, weirdly, might be Thoko Didiza, minister of agriculture, land reform & rural development and one of the more level heads in the cabinet. As I understand it, provincial deeds offices are being readied for reopening under the current level 4, provided staff get sufficient protection, so if they do get moving, there’s probably R30bn-R40bn in the pipeline right now.
As for estate agents, they fall under human settlements minister Lindiwe Sisulu, a harder case and unlikely to cut them any slack so they can get property sales moving again. Apparently the reason estate agents are shut down is because show days attract people to houses — but it would be easy to have someone at the door regulating entry or simply to show by appointment.
This is so basic you struggle to understand why real estate doesn’t top the economic revival list. Processing the transfer of a title deed cannot possibly spread Covid-19, and our economic system is grounded in the purchase, ownership and sale of property. It is zero-cost quantitative easing.
President Cyril Ramaphosa needs to be much more demanding of his ministers. He needs to ask them what they are holding on to that can immediately get more economic activity going. They should all give him five items by Friday. Like in school.
Business leaders and the government are talking all of the time, cigarette farrago or not. Which is good because there’s a lot to sort out. Business is trying to put in place workplace safety measures so more restrictions can be lifted quicker. Its efforts have already seen R7.3bn paid out so far by the Unemployment Insurance Fund to more than 1.6-milllion workers through 173,000 firms.
If things go well, there might even be a case for the government jumping from level 4 to level 2 in a few weeks, or at least combining levels 2 and 3 into one. The economics are desperate and whatever we do, the infection will spread and some facts are clear: the safest place for older people (including most of Ramaphosa’s cabinet) is at home, and the safest place for children is at school.
Ramaphosa’s dilemma is exactly when to pivot from which what he epidemiologists calls “saving lives”,“but call life years” (when you save an 80year-old, you’re saving fewer life years than when you save a 40-year-old), to salvaging what might be left of the economy so the 40-year-old has a job to go to and can start paying taxes to the state again to fund the health service. It’s an entirely political call for him, but still a hard place to be.
When does he stop feeding the securocrats? Soonish, I suspect. British American Tobacco would not have pulled its court action this week against the tobacco ban without having been given some comfort. I doubt a threat would have had the same result at this late stage.
My instinct says it is going to be health minister Zweli Mkhize who will tell him when to move, and he at least has a sound understanding of the scale of the economic catastrophe we face.
THIS IS SO BASIC YOU STRUGGLE TO UNDERSTAND WHY REAL ESTATE DOESN’T TOP THE ECONOMIC REVIVAL LIST