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Foreigners are not pushing up house prices - Rode

Ronnie Morris Business Report
Foreigners are not pushing up house prices - Rode

Cape Town - Foreigners were not responsible for pushing up South African house prices, Erwin Rode, a top property consultant, said yesterday. The high prices were attributable to the rising wealth in the country amid low interest rates, he said.

Rode was speaking at the Rode conference held near Stellenbosch, attended by estate agents, property developers and financiers.

He said local house prices were not the only ones rising over the past five years.

"It's a global phenomenon and in many countries you have fast-growing house prices. Why? Because of one common factor: wealth. As the population gets wealthier, they're prepared to pay more for houses."

The average house price is expected to reach R1 million next year.

Local house prices rose faster than in the rest of the world because South Africa's interest rates came down from a higher level, and because of the previous decade's low economic growth in this country.

But Rode warned that a proposal by a government-appointed panel for a moratorium of two years on the sale of state-owned land to foreigners would feed perceptions that South Africa would become a second Zimbabwe.

The panel recommended a ban on foreign ownership in classified areas on various grounds. But Rode had received a call from a German news agency and was told that foreigners would look on South Africa as a second Zimbabwe.

"The problem with Africa is that all you need is softness on these issues and the world will make the wrong conclusions. We can't afford as a country to make these kinds of gestures. They will be interpreted negatively. It is going to cost South Africa, without us gaining anything whatsoever.''

Rode said that when the panel was announced, the reason given for it was that foreigners were pushing up prices in South Africa in spite of the fact that the government did not know how many foreigners owned local property.

"I'm afraid the whole premise on which this committee's work was based was wrong. House price growth is not created by foreigners; it is created by wealth. The only way to stop house prices growing is to somehow diminish wealth.''


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