Let homeowners cement economy

The property market is the canary in the mineshaft (how appropriate is that, these days?) of the South African economy. If it is struggling, the broader financial situation is dire. It goes without saying that the overall economic situation currently is dire, so it’s no surprise that the experts are predicting that house prices could decline across the board by as much as 20% over the next few years.

The property price bloodbath could well be exacerbated by people who have been laid off or put on short time having to give up their homes because they cannot continue with the bond repayments. Sadly, they will lose considerable sums of money in the process, both in the decline in their asset value and the mortgage payments already made.

For older people – those who have retired or are nearing retirement – that loss of value can have devastating consequences, especially where a fixed asset like a house is not only a home, but a pension hedge investment.

Yet, the awful coronavirus cloud may well have a silver lining for some of those in the property market. If house prices do decline and interest rates remain at current low levels, those who do still have jobs might be able to get that vital first foot on the bottom rung of the market.

Property ownership is a critical stabilising factor in any economy and society and a vital building block for the middle class. That middle class has been battered by the Covid-19 crisis, rising prices and declining incomes – yet is still seen by the government as the “milk cow” to fund its grandiose dreams of a “national democratic revolution”.

The government needs to support the property sector and encourage home ownership. The positive trickle-down effects of such help will be felt throughout the economy.