Real Estate Investor Magazine South Africa May 2014 | Page 28

STRATEGIES

And so, our FNB estimate of the National Full Title
Property Replacement Cost Gap, i.e. the percentage
by which the average property’s replacement cost
exceeded the existing home value, remained at a very
significant 22.6% near to the end of 2013.
However, not all of the blame can be placed on building
costs. The reality is that employment growth is now
down to a snails pace, and it is tough to deliver housing
to a very significant number of people who don’t earn
a reliable income. As at the 3rd quarter of 2013, nonagriculture employment growth was a meager 0.17%.
Nevertheless, amongst those that are employed,
residential demand relative to supply in the lower
income areas such as the former Black Townships
remains solid.
This is reflected in Major