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Foreign Ownership Issue Will Die
From Property24
30 June 2006
South Africa's government-appointed investigation panel into the impact of land ownership by foreigners was likely to die "a political death", the publisher of The Property Magazine, Tony Vaughan, said on Thursday.
Speaking to the Cape Town Press Club, Vaughn - a London born businessman - said the panel, headed by Professor Shadrack Gutto, was likely to draw out the process of reporting on the issue "by possibly announcing a process of going through another process".
Vaughan, whose popular magazine hit the streets of Cape Town in 2004, said foreign ownership of property restriction was a misnomer. He asked the question: "Why not restrict tourism by foreigners or foreign direct investment by foreigners?" he said.
Vaughan said property prices in South Africa were not being inflated by foreign ownership which only constituted 1% of South African property value and only 0.2% of land area, but by factors such as dinner table chatter about property values as well as the environment in which loans were easily available. In some cases loans from five different banks were gleaned on a single salary.
The question also has to be asked whether the thousands of South Africans - including about 500,000 South Africans living in London - should be restricted when they return to the country to spend their foreign-earned currency on property in South Africa. He noted that it was estimated that some 300,000 South Africans had returned to the country last year alone.
As far as farming property was concerned, it had to be noted that it was more dangerous being a farmer in South Africa than a soldier in Iraq. The "hit rate" in South Africa against farmers was over 300 per 100,000, he pointed out, noting the irony that one was "hardly going to have a press club lunch to talk about foreign investment in Iraq".
He said that there was an emerging market of serious entrepreneurs in South Africa among the previously disadvantaged. At present the normal sale rate of property in Johannesburg was some 8.2% of properties a year yet it was only 1.8% in Soweto. The latter equated in each home being sold every 50 years.
However, this habit of people in Soweto remaining in their homes and making additions and renovations would change - with inevitable, and positive, consequences for the property market.
At the same time he had noted a story about a family who lived in one shack who now lived in 10 shacks because they were in line for ten RDP Reconstruction and Development Programme) houses. He said one could predict that they would live in four and sell six - against with inevitable consequences for the market.
With that would come the "old" South Africans pushing up prices in their suburbs - the previous white areas - as the "new" previously disadvantaged South Africans knocked at the property door in these areas.
Original articles published at www.property24.com.
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